Ways To Overcome Investment Fear
Investing goals don’t need to be complicated. Your goal could be to have $1 million in assets you can convert to cash by the time you’re 65 for retirement income.
Experiencing investment fear is pretty commonplace, even for seasoned investors. After all, the more lucrative an investment is, the riskier it tends to be. But, since you cannot rely on solely engaging in “safe” investments, you really ought to know how to push through this fear and invest when need be. With that in mind, we are going to explore different ways to overcome investment fear.
Different ways to overcome investment fear
As an investor, it is paramount that you have a firm understanding of both the investment “game” and how you fit in it. Different personality traits cause people to be some “kind” of investor. Some are timid and prefer to stay safe. Others tend to be more reckless and go for fast money. Some invest their full time and energy into studying their investment opportunities. At the same time, others are small business owners looking for new ways to increase their funds.
Every type of investor has their fears. If you want to make money doing this, you first need to come to terms with the kind of investor you are. By doing so, you will know when to correct your initial decision and avoid costly mistakes. In the following method, we will explore different types of fear and how they impact different investors.
Do your research
We fear what we don’t understand. This simple statement remains true for horror movies, new advances in technology, and yes, even for investments. If you are unfamiliar with a particular investment opportunity, it is normal to feel frightened to invest in it. So, the solution is simple. Do your research. The more you understand the investment at hand, the better you will know whether it is worth engaging with. You can hardly do “too much research” as the more research you do, the better your decision will be.
Set up an investment strategy
Unfortunately, it is not always possible to adequately research every investment that looks interesting. It doesn’t take much to find yourself faced with several opportunities, none of which you have a firm grasp of. To help tackle fear, in this instance, you need to set up an investment strategy. By having a strategy, you will see be able to prioritize investment opportunities and not dread picking the wrong ones. A good plan helps you orient your efforts properly and maintain focus during difficult times. Ideally, you will outline your strategy as soon as possible, as it is invaluable in conquering fear.
If having a long-term investment strategy isn’t enough, you can try outlining short-term goals. These can be especially useful if you are new to investing as a whole or to a specific market. Short-term goals will also help you keep your focus and keep your emotions in check. Furthermore, if negative thoughts start creeping up, you can always look back on your goals and see what you’ve achieved. This confidence boost can be just the thing you need to overcome a momentarily wave of fear.
Remember the big picture
There is not a seasoned investor out there that hasn’t experienced loss. In order to learn, you need to experiment. And experiments, by default, include the risk of loss. For some, a streak of a couple of losses can be more than enough to instill fear of future investments. People start doubting themselves and even consider abandoning investing as a whole.
To combat this type of fear, you need to look at the bigger picture. Most investments depend on current market trends. For instance, you wish to invest in Florida real estate because you have determined that the trends seem favorable. However, remember that while Florida real estate is a great opportunity now, it may not be so in the years to come. Therefore, if you fail to make money out of it, it may not be your fault. Understand why you are investing and what your long-term goals are. Sometimes, it helps to not focus on your current performance and instead wait for better luck to come. By remembering the big picture, you will have a much easier time staying calm and not trying to make up for your losses by engaging with needlessly risky investments.
Never invest what you are not willing to lose
If you are new to investing, you mind find it hard to gather the courage to make your first investment. After all, the act of doing so does seem risky, even if the investment is pretty sound. The easiest way to overcome fear is to invest what you are willing to lose. That way, you won’t have to worry about whether your investment will pay off or not. And, instead, you can use the experience to learn more about the process and its various aspects. Over time, you will build confidence, and you will much more easily invest more considerable sums.
Try to figure out why you doubt your investment
If none of the methods we’ve outlined seems to help, try to dig a bit deeper. Our brains are tricky, to say the least, and we may not always be sure why we are afraid of something. If you have no rational reason to fear investing, you might want to see what that investment is connected with. You may even learn something more meaningful about yourself.
By reading this, you might think that investment-fear is a bad thing. But, in actuality, it is a necessary energy reserve for any successful investor. The fear you feel helps you stay alert and avoid making unsound investments. If you feel no fear, no matter what the investment is, you are either too seasoned within a market (which means you have nothing else to learn from it). Or, you’ve built up a false sense of security, and you think that whatever investment you make is a sound one. So, keep in mind that while it may be challenging to overcome investment fear, it is much better to do so than not feel it at all.
Author: Vincent WoodleyAfter getting his psychology degree, Vincent Woodley has worked as an HR manager and business consultant. Now, he focuses on writing helpful articles about psychology, mostly related to the business environment.