On Nerves: 4 tips from Saxo Bank on how to protect your mental health in a market crash

In 2025, the market is giving investors no respite: trade conflicts, geopolitics, volatility. Jacob Felkenkron, head of investment strategy at Saxo Bank, describes the impact of stock crises on mental health and shares tips on how to act in turbulent conditions to maintain psychological balance.

Even the most balanced investors get stressed out at times, Felkenkron believes, and it's especially evident during prolonged market downturns: "You may have felt a heavy feeling in your stomach looking at your portfolio after a particularly bad day, or tossed around at night not knowing whether to sell, buy more, or stop following the market altogether. A recent study "The Stock Market and Investor Psychological Health" shows that this concern is not far-fetched. Market losses do have a real and measurable impact on mental health," writes Felkenkron.

The study authors, Ball State University professors Chang Liu and Maoyun Fan, analyzed the medical records of millions of U.S. investors and found that the number of antidepressant prescriptions and psychotherapy sessions increased markedly when the stock market fell significantly. 

"It shows how closely linked our financial and emotional lives really are," Felkenkron notes. And it's not just general instability or bad economic news - stress comes from personal losses. Even if investors aren't in danger of losing their jobs, a decline in portfolio value puts psychological pressure on them.

The study confirmed one of the main tenets of behavioral economics: losses have a much stronger psychological impact than gains. "This fits perfectly with behavioral finance theories based on loss aversion - the human tendency to experience the pain of a loss much more acutely than the satisfaction of an equivalent gain. Put simply, losing €1,000 hurts much more than gaining €1,000 of pleasure," says Felkenkron.

This effect is most pronounced among investors between the ages of 45 and 64, according to the study. In this age group, portfolios tend to be larger and investments are perceived as the foundation for retirement savings or other important life goals. "A stock market crash for these people is not just a setback, it is a threat to future plans, hopes and security, amplifying the emotional impact," says Jakob Felkenkron. 

Market losses logically translate into psychological stress: "Metaphorically speaking, losing money in your portfolio is not just a nuisance, it's like losing a family heirloom," he writes. - It's emotional, it's personal, and it profoundly affects your mood. Especially in 2025, when investors have experienced several waves of instability at once. Headlines like 'market collapse' or 'escalating trade war' are not just news, but a real threat to the psycho-emotional state of those invested in the market."

Felkenkron gives some practical tips to help you not only protect your money, but also cope with psychological losses. 

1. Do not react hastily. Avoid making important financial decisions based on emotion. The worst decisions are often made as a result of panic or anxiety rather than rational thinking.

2. Stick to a long-term investment plan and diversify your investments. If volatility has affected your portfolio too much, it may be an indication that your portfolio is not sufficiently diversified or balanced;

3. Talk to someone. If you are unsure of your strategy, ask an expert for information and analysis. Or just talk to a trusted friend or family member. An open conversation can help reduce anxiety and help you feel supported.

4. Remember that you are not alone, and the markets are recovering. History shows that markets have always recovered - even after steep declines. Patience and a long-term perspective help protect not only your money, but also your mental well-being.

Felkenkron reminds us that real wealth is mental health. "The stress you are experiencing today will not last forever. Like the markets, your emotional resilience can - and surely will - recover over time. In the meantime, breathe deeply, diversify, talk through the problems - and hang in there."