How can losing money in the stock market lead to health problems and early death?
A recent study published in the American Economic Journal found that “wealth shocks” “strongly affect physical health, mental health, and survival rates.”
When people unexpectedly lose money they often feel strong emotions such as anxiety, anger and frustration that can take a toll on their physical and mental health, says Pamela Yellen, financial investigator and two-time bestselling author.
The effect is likely magnified when market losses are larger, and for older investors nearing retirement.
“Market volatility is a fact of life. If you have money in the market, there is no avoiding the ups and downs,” she says. “We had two market corrections of 10 percent or more last year.”
Three recent studies highlight the deadly connection:
- People with as little as 10 percent of their wealth in the market who lose just 10 percent stand an increased risk of dying early, or suffering health problems such as high blood pressure and depression, finds a study published in the American Economic Journal.
- A market loss as little as 1½ percent (which can happen on an almost daily basis during periods of higher volatility) correlated with a .5 percent increase in fatal car crashes, a second study finds.
- A 25 percent market decline corresponded with a spike of over 5 percent in admissions to California hospitals for mental health conditions like anxiety, panic attacks, and major depression, according to third study.
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