There are plenty of
reasons to have reservations about investing. However, succumbing to these
fears also means missing out on proven opportunities to expand your personal
wealth. Overcome investment fear by becoming more familiar with different
investment options, addressing any specific concerns you may have, and
developing a reliable investment plan.
Assess your personal finances.
If you feel like you don’t have enough money to start investing, it’s worth
taking the time to monitor your finances. You may be able to identify and curb
unnecessary spending, and wind up with some discretionary investing money after
all.
- Monitor your expenses for a month or two, and consider categorizing expenses according to necessity. For instance, while you’ll likely want to continue buying groceries, those daily $6 lattes might not be so tempting when you realize you could be investing $180 a month instead.
Acknowledge the opportunity cost of investing.
You may be thinking that you’d rather spend your discretionary income on
experiences and entertainment. It’s hard to argue against rewarding yourself from
time to time. That said, if you find yourself constantly splurging on
possessions and vacations, take a moment to consider the practical trade off
you’re missing out on. Namely, investments tend to increase in value over time,
meaning you can get more for your money later on.
- Diminish unnecessary spending by reminding yourself about the rewards of using your money to invest. For instance, talk yourself out of this year’s handbag by reminding yourself you can visit Italy instead, after a few years of patient investing.
Don’t postpone investing for later
in life. One of the most common reasons
people hesitate to invest is the belief that they can simply begin doing so
when they’re older. While this is true, it also means you’ll miss out on some
serious investment potential - if only through exponential growth of your
savings.
- The fact of the matter is that there’s never an easy time to buckle down and start investing. Making the decision to start now is one of the best ways to both overcome your hesitation and wind up with a successful investment portfolio.
Invest a fixed amount in regular intervals.
One of the scary factors when deciding whether to invest is “when”. You can
effectively eliminate this concern - and temper the actual risk involved in
investing, by investing the same amount of money periodically.
- It may seem too good to be true, but it’s a proven strategy. It’s called dollar-cost averaging, and helps account for the regular ups and downs of the market. For example, simply invest $50 every month, or $150 every quarter.
- Investing in mutual funds is a good route to take if you intend to invest in incremental amounts. Mutual fund traders don't charge you each time you make a new investment, whereas you have to pay each time you purchase a stock.
