Investment Fear is Real: Here's How To Fight It
Hands up if ‘investing’ still sounds like a slightly foreign and scary concept to you?
The fear response is totally rational, because investing is mired with a gazillion misconsceptions and an air of intimidation. Rest assured that you're not alone in your fear. What you shouldn't do, however, is let the fear prevent you from investing.
No one has an innate understanding on how to invest. We aren't taught about personal finance at school. Investment journeys aren't always smooth, and, at the start of them, pretty much everyone feels dazed and confused.
Yes, investing does carry some risk. Putting even a little bit of money in the market feels terrifying when you don’t have much of it, or if you know little about how it works. But remember - over the long term, these small sums build up. Leaving cash in low-interest savings accounts is unlikely to get you the returns you're after.
So what are our top tips for beating your fear of investment?
1. Change your preconception of investing: throw ideas like ‘investing is only for rich people/men/financial gurus/older generations’ out of the window. These myths play a huge role in your fear of investing and you need to reframe them, pronto. Investing is for everyone (who isn't in debt), and you can get started with as little as £25 a month.
2. Educate yourself: it's far less daunting to start doing something new when you've done your research. Read up on the plethora of online resources, come along to our introduction to investing workshops at Vestpod, or see a financial advisor. Some elements of investing can indeed be tricky, but the basics of investing are pretty straightforward and you'll be a-okay mastering them.
3. Know what you're comfortable with: determining how much investment risk you're willing to take is not only crucial in the process of you mentally ‘okaying’ investing, but it's also key to your investment strategy. Be clear on what your goals are. Don't invest crazy amounts of money you can't afford to lose. It's all pretty common sense stuff - you're either cautious or you're happy to take a bigger risks for a chance to (potentially) see big profits. If you're not sure what you're comfortable with, it's best to speak to a financial advisor.
4. Get familiar with your options: understanding what's out there gives you a better sense of what's right for you. Online services or “robo-advisors” such as Nutmeg, MoneyFarm and Wealthify are some examples of iPhone-friendly finance, using low-cost exchange traded funds to build cheap portfolios of passive funds. Platforms such as AJ Bell and Interactive Investor, on the other hand, offer you a chance to put together your own portfolios of funds. Do some comparing online (i.e. type “compare investment platforms and robo-advisors”) and decide what works best for you.
5. Start small: test the waters and begin with smaller sums of money so you don't risk too much while you're still learning. Make sure you already have an emergency fund in place and repaid your expensive debts (i.e. credit cards, overdrafts, …). Once you're more confident, investing more is only logical. The nice perk with investing bigger amounts is that you may generate larger profits. Ka-ching!
6. Ask questions: there is no such thing as a basic or silly question! Vestpod's Facebook group is a great resource if you're looking for informal tips from women within our community. We all had a million questions before we started investing - it's normal. It's also doable - all it takes is a little bit of faith.
7. Congratulate yourself: no matter how much or how little you decide to invest, the fact that you overcame your fear and did it is amazing. So don't forget to give yourself a pat on the back and reward yourself with some quality fizz.
The bottom line is: it's so easy to make excuses for not investing because it feels complex, it's laden with alienating jargon and it sounds like something only old, rich men are good at. But if you want to grow your money - by taking more risk also, build your wealth and achieve financial independence, investing is one of the smartest decisions you can make. Start reframing your negative narrative around investing. Come out of the shadows into the world of finance. It's really not that scary… promise.