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5 Real Investing Fears That Held This Financial Planner Back

The following is a guest post from rockstar financial planner and writer Leah Manderson. Please join me in welcoming her to the blog today!

Shortly after leaving my full-time job to pursue my own business full-time, I dutifully commenced the task of rolling over my 401(k) to an IRA.  I was feeling pretty self-congratulatory about this at first.  “How very grown-up of me to roll over my 401(k) instead of letting it sit! I am taking control of MY money, thankyouverymuch. I will invest this in something good.”

When all the papers were processed, I had darn-near exactly $10,000 in my Rollover IRA.  It was probably the most money I’d ever invest in one shot, so, naturally, I wanted to do it right.  I pulled out my calculator and went through all the steps of my 6-step investing process.

After maybe 10 minutes, I had figured out exactly which investment I would choose.  I clicked through my Schwab account, put in my order, hovered my mouse on the “buy” button…and then had a thought.

 “Maybe I’ll just wait it out for a day or so. See what the stock market does. No need to rush to invest it just because it’s in the account!”

Days later, however, I still hadn’t made the investment. I was procrastinating.  My chumminess had turned into fear.  Yep, I do this for a living. And I KNOW to make an informed decision.  I studied Investment & Retirement planning through my Certified Financial Planner course.  And gosh darn it, I’m a Registered Investment Advisor—meaning I’ve passed a regulatory agency test, and hold an official government-enforced license to give investment advice!

But I’m also a human. And I was up against some true-blue investing fears that hit virtually ALL of us when putting our money in anything that’s not “a sure thing.” Here’s what I was fearing, plus the thoughts I used to overcome those investing fears…

 

Investing Fears #1: What if now is a bad time to invest? What if the market goes south from here?

You’d be hard-pressed to find a single person on the planet who isn’t scared of losing money, and the thought of putting in $10K—and watching it fall even a little bit—well, sucks.

Overcoming the investing fears: I reminded myself that my goals for this money are nearly 40 years out. Over the past 40 years, the stock market has returned about 10% on average.  Some years during that time, stocks have gone up by 35%, and other times, stocks have gone down by 35%. However, I’m not investing for a year. I’m in this for the long run, and I still believe (even under my fear of losing money) that stocks go up, given enough time.

 

Investing Fears #2: What if there’s a better investment out there?

There are hundreds, nay, thousands of different investments I could chosen from. With a little more research, could I have found a fund that was just *this much* better than the one I was leaning toward?

Overcoming the investing fears: Perhaps yes, but it’s not worth my time to research every single investment opportunity available. It would take years! Decades! And that’s just too much time to wait!

The time value of money says that money today is more valuable than money tomorrow. It’s more important to get started early and modify as you go, than to wait until you know everything.

 

Investing Fears #3: Is this too much money for ONE investment?

If you’ve ever read any beginner’s primers on investing, you’ve likely heard, “Don’t put all your eggs in one basket!” Putting $10K into a single investment definitely felt like putting too much money in one basket!

Overcoming the investing fears: When I ran the numbers on how that investment would fit into my overall investing strategy, that amount was right on target. (You can do this, too—it’s math even a 5th grader could do!)

Which brings me to…

Investing Fears #4: What if my “safer” strategy is all wrong? Should I try something risky like choosing individual stocks or options? That could pay off big!

As a financial planner, I strongly believe in having an investment strategy that guides your decision making. A strategy based on your goals and investing personality, among other things.

Overcoming the investing fears:  While I definitely want to try my hand at some riskier stocks one day, I think I’ll do that with money I can easily afford to lose—not my future retirement money!

In the end, I decided to invest my money in a small cap index fund that fit my bigger investing strategy (asset allocation).

My fears of losing money actually came true, when the stock market went down right after I invested. I didn’t like it, necessarily, but I was surprisingly unfazed. I’m planning on holding this for a very long time. And 40 years from now, that small drop will be erased by many good years of returns.

 

At the end of the day, it’s totally normal to have fears about investing—even a financial planner gets antsy sometimes.

I like to think, however, that all of these investing fears are a reminder to get back to the basics of investing: build a plan, stick it out through all the ups and downs, and invest early and often.

It really doesn’t have to be so scary after all.

 

What Fears Keep You From Investing?

 

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28 responses to “5 Real Investing Fears That Held This Financial Planner Back

  1. “What if there’s a better investment out there?” I think a LOT of people have this fear and it can end up consuming your free time. I don’t do individual stock investing and have stuck to mutual funds in my 401k and other retirement accounts. I keep it simple and that saves me the time and energy of researching for marginally better investments.

  2. All of these reasons are why I just don’t pay all that much attention to my account balances in the first place. We mostly invest in index funds and we check in on them 2-3 times a year. I freak when I see an account balance dropped, so I just stopped looking! =/

    1. For an individual investor, you’re 100% right–while you’re young, invest and look away.

      As a financial planner, though, it’s in my job description to stay on top of financial & economic news on an ongoing basis–so it makes that whole ‘don’t look but a few times a year’ thing pretty hard!

  3. Isn’t it crazy how much energy we’ll put into picking *just the right* thing?

    I think that’s why it’s important to have a plan–versus trying to re-research every single investment that ever interested me each and every time I need to invest!

  4. Using math calms me down! Mathematically speaking, index investing is pretty darn safe! I’ve been investing since I was 10 years old and sleep very well at night!!!

    1. Yes yes yes! Run the math, prepare for the ups and downs, and index investing can *definitely* ease some investing fears. Thanks for your comment, Will!

  5. For me, investing is something I’m learning about slowly over time (while I pay off my student loan debt), so that I’m ready and have eliminated some of the fears. It’s definitely something I treat as a hobby, and I think that’s how you have to treat it if you want to be successful – unless you really hire someone to do everything for you. But it’s also really important to acknowledge the fears you have re investing so you do act on your fears. Great points here!

  6. Welcome to Stefanie’s blog Leah!! I wrote something like this a while back. It’s amazing to me how much people fear investing, sometimes more than death and public speaking, yet like most fears, they are mostly in our mind only. Thanks for sharing yours and how you overcame them!

    1. It’s sort of not that I even truly “overcame” them–I have to continually overcome them every time I invest!
      I know investing is good for me. I see the benefits first hand. But I still always have at least one of these bad boys pop in my head each time I transfer money into my investment accounts!

  7. I do tend to read investment news since I am generally interested by the markets but it doesn’t affect my long term strategy of buy and hold when it comes to the index funds and ETF’s I chose. Like you, I don’t like losing money but knowing what the plan is and believing that in the long run I will be ahead, allows me to let go and focus my energy on other pressing life concerns.

    1. Once I pick, I’m solid–I hold and hold and hold, but pulling the trigger can still be hard!! Thanks for your thoughtful insights, Kassandra. You’ve got a good head on your shoulders 🙂

  8. I couldn’t agree more Leah! I was in the industry for almost 15 years and still deal with some of these fears myself. A fear that can hold me back is wondering if I’m making the wrong decision. It’s not that I’m doing something speculative or anything like that, but being prone to questioning a decision. Waiting a day then turns into a week, then a month and so forth. That’s a big part of the reason why I believe in the importance of having an investment plan so I can view decisions through that and if it lines up then I have a quantifiable reason as to why it’s ok to pull the trigger.

    1. Having a plan is EVERYTHING.

      It’s easy to question every decision when you’re sort of stabbing in the dark. Especially when that decision is so emotionally tied to something like, oh, money! Haha 🙂

      The whole idea of needing a plan is why I’m holding the webinar I mentioned in the article!

  9. Its amazing that people fear investing so much. I can’t relate because I bought my first mutual fund at 19, and I always knew the people who invested saw returns. Some of my friends and family know I am big into building wealth so they always come up to me and ask for help in random conversations, but it usually leads nowhere.

  10. Oooo great post!! I would say my fears are definitely losing money and making a bad decision, but at the same time I know it’s better to invest than to let your money sit in a savings account. We just opened two mutual funds and are dabbling a bit in individual stocks, too. We’ll see how it goes – honestly there’s so much to learn and I feel the best way is to dive right in!

  11. Investing is certainly a scary thing at times. The few times I’ve put in a large sum has always made me a bit nervous. However, the vast majority of the time the investment works out. Additionally, as you mention, if you are planning for the long haul, it’s definitely better to start investing rather than anticipating the worst.

  12. This is a very good post. I have experienced all of the same issues. i think having and sticking to a plan is the best thing to help get through all the road blocks we put in our way. For me, retired twice now, I have to keep telling myself I don’t have 40 years to invest and need to stay focused on income. Sometimes after reading all of the great blogs regarding FI and investing I get a little too excited and have to cool my jets a bit to stick to the plan.

  13. Nice to see you here, Leah! I haven’t done much investing as I’m pretty focused on paying off debt. I can see myself being scared, but I’m trying to educate myself now and be prepared to jump right in.

  14. Investing is really not my forte. I don’t know how to read those up and down numbers and when it is the right time to do so! In contrast, I am very willing to learn because some friends of mine have grown their stocks dramatically! And, they seem to have made the right moves.

  15. I know what you mean! When I got ready to rollover my 401K into an IRA when I left my previous employer, I had lots of hesitations and concerns. I ended up putting it off for too long, almost 3 months, before finally getting over my fears and concerns. These are real concerns that lots of people seem to have. Thanks for sharing how you got over them!

  16. One of the main reasons we exist is to help people get to the point where they can invest for the future. More people would invest if they had available funds to pursue this option. Such good points. I’ll definitely need to share this webinar details. Thanks for offering it!

  17. Awesome post. These fears are very human and may help us in other areas of life but not for investing. You really have to be cold hearted with yourself when it comes to investing. Great tips.

  18. We had a lump sum to invest in 2010 and it took us a YEAR to pull the trigger! We did most of the necessary research toward the beginning of the period so there really wasn’t a reason to wait except that we were succumbing to these fears. But since that investment has done well, I think it will give us confidence to move forward quickly with our decisions on future investments. This wasn’t a long-term investment, so waiting a year to implement our plan actually hurt it quite a bit!

  19. For me, at first it was not fear that stopped me from investing, but the fact that I was overwhelmed with the amount of information I was given. Coming from a background where investing is not common, I go paralyzed and could not do anything. However, I managed to take a step and invest only when I was given just the information I needed for the type of investing I wanted.

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