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Fear and Investing
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Alexander
Student Contributor
Posted October 15, 2019
Investing can be an essential part of achieving financial success. With all the potentially expensive goals people have like retirement and dream homes, investing can prove very useful. But investing carries risk, meaning there’s always the chance that money can be lost. When things start to take a tumble, it’s natural for fear to kick in; but, succumbing to fear can cause further issues, so knowing how to handle these emotions may be useful for protecting your investments.
Causes of fear
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A large part of conquering fear is identifying what the fear is and what might be causing it. When it comes to investing, the causes may prove difficult to pinpoint, but there are two common fears that folks may have.

The first amongst these is the fear of loss. Most people dread the thought of losing money, so when things start taking a turn for the worse, people tend to become fearful. The fear of further losses in the market can lead to investments being sold at a loss and missed opportunities when the market rebounds.

The second is the fear of uncertainty. In many ways, uncertainty and loss can go hand-in-hand, but there are some differences. In particular uncertainty can be not only related to loss, but to the chance of not earning enough. Maybe you’re making money, but you’re uncertain if the money will be enough for your goals. Uncertainty amongst investors is also compounded by the confusing and jargon-heavy world of finance. This can prove difficult for the new investors to understand. This is a fear that can keep people from investing in the first place and is ranked among one of the scariest things about the world of investing.
Conquering your fears
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The best part about discussing the fears listed above is that they can be conquered. The financial world wants people to be engaged, so there’s a plethora of tips and tricks you can use for understanding any investment-related topics.

Chief amongst these is setting goals. Setting goals is an essential part of investing and in many ways sets the roadmap for your financial future. This can help to calm any fears because it gives you an alternate measure of success. The market could be struggling, or your returns could be lower than the average, but as long as you’re on track for your goals, then perhaps there’s nothing to be afraid of.

Another tip is to reach out for help. There’s no shortage of certified financial professionals and many would be happy to help you out. Having someone manage your money, or even simply having their advice, can help take some of the fear out of investing. It helps to have an expanse of knowledge at your side!

The final tip is for those who may already be invested. It may be a good idea to avoid checking your investments too frequently. Watching your investments can be a roller coaster of highs and lows, even when all those numbers don’t mean much. Investments of all types rise and fall over time. An investment can be down one month and bounce back the next. Of course, maintaining some oversight is important to avoid missing anything catastrophic (like a company going bankrupt), but it’s always worthwhile to remember that the only number that matters for the most part is the value of the investment when you sell it for cash. This all means that as long as you’re invested for the long term, time is on your side. There’s often far less to worry about than the news or some “expert” on the internet may make you think.
Source:
https://www.investopedia.com/articles/basics/10/how-to-avoid-emotional-investing.asp
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