The Sunday Mail
Investors are people who put their money into stocks, bonds and other investments in the hope of making a profit. However, investing can be a risky endeavour, and investors often find themselves worrying about the potential pitfalls. This article will discuss the common fears of investors, and how they can be addressed.
One of the most common fears of investors is the fear of losses. This fear can be especially acute during periods of market volatility when share prices can fluctuate wildly. Investors worry that their investments could lose value, leading to a loss of capital.
To address this fear, investors should diversify their portfolios, investing in a variety of asset classes, such as equities, bonds and property. This will help to spread out the risk and reduce the chances of a significant loss.
Another fear of investors is that of missing an opportunity. Or, like most say, FOMO, fear of missing out.
This fear can arise when investors miss out on a stock or other investment that turns out to be very successful.
We have seen a number of people experiencing this when Bitcoin performed well. Investors worry that they missed out on a chance to make a lot of money. To address this fear, investors should make sure they do their research thoroughly before investing. They should also look for investments with a long-term outlook, rather than focusing on the short-term.
Invest in funds or equities with a long history. Not all performances year-on-year have to be good; it is the longer-term compounding return that one should focus on.
According to a survey done by cowrywise.com in 2022, about 30 percent of respondents believe they currently do not have enough money to invest, while 11 percent feel investing is complicated. Fourteen percent are afraid of losing money, and 5.4 percent are scared of investing because they think their funds will be “trapped”. Other respondents exhibited multiple fears. Ten percent were afraid of losing their money and perceived investing to be complex. Seven percent felt investing was not affordable and that investing would trap their funds.
An additional 7 percent expressed all four fears. Other respondents preferred the safety that traditional banks offered. While numerous expressed fear of investing with larger institutions because of bad experiences in the past.
Investophobia is a real and very common fear. The first step in overcoming it is to understand the root cause of your fear. One has to establish why you are afraid of investing and what one can do to overcome it. Once you have identified your fears, you can focus on building your knowledge and skills.
Learning about investing, the different types of investment vehicles and options you can invest in, can help you become more comfortable and confident in taking on investments.
Read and listen to as many as possible online webinars hosted by reputable investment and advisory firms. As you gain more knowledge and experience, it is also important to keep in mind that investing can be a great way to reach your financial goals, so it is worth taking the time to understand the risks and rewards.
Finally, it is recommended to start with small investments until you gain more confidence. Taking small steps and setting achievable goals can help you become more comfortable with investing. It is advisable to ask for the help and guidance of a financial advisor, especially if you are new to the investment world. We are trained to guide and assist when fear steps in, to make thought-through decisions and not because you are scared.—Moneyweb
