Last updated on August 29th, 2023 at 09:20 pm
58% of Americans own stock, a percentage that has held fairly steady since 2010, but has not fully rebounded to the 62% of people who owned stock prior to The Great Recession in 2007. It’s clear that many would-be investors have fears about the volatility of the stock market and are hesitant to invest. Financial anxiety has the power to keep you up at night worrying about the future of your finances and accompanying investment decisions. Asking questions is important when it comes to overcoming your fears of investment. You have to consider what is the best gold IRA? What is the best stock line? What are the best metals? When you ask the right questions, you’ll do better for your future!
While there are many factors that influence fears surrounding finances: debt, job security, and identity theft, among others, the good news is that there are steps you can take to overcome those worries. In many cases, just having reliable information on your investments and understanding how the market works can be enough to calm any fear.
While there are many factors that influence fears surrounding finances: debt, job security, and identity theft, among others, the good news is that there are steps you can take to overcome those worries. In many cases, just having reliable information on your investments and understanding how the market works can be enough to calm any fear.
Here are 4 Fears That May Be Holding You Back From Investing:
- A Stock Market Crash.
A stock market crash is when there is a severe point and percentage drop within a small time frame, such as a day or two of trading. The stock market has been performing well over the past few years, but since the start of 2022, it appears that the good times may be coming to an end. The S&P 500 went down over 23% for this year, and bond yields are rising, which has investors worried of the effect of this crash on their portfolios.
While no one knows what will happen next, the best thing to do in this situation is to stay calm and focus on long-term goals rather than making decisions based on short-term fears. It’s completely normal for markets to fluctuate but over time, the stock market has always gone up. This is mainly because of economic growth – over time the population grows leading more people to consume, which in turn increases demand for produce and the requirements for corporations to sell more.
- Making Investment Mistakes.
Whether you have a high or low risk tolerance, making mistakes is an essential part of the investment learning process. Yes, people would like to avoid making mistakes because they don’t want to lose money. However, those mistakes are how you learn and grow as an investor. The key is to learn from your mistakes so you don’t make the same ones in the future.
Common mistakes include investing too much in one stock, not staying up to date on financial news, panic selling at a loss during a downturn, not diversifying your stock, or even something as simple as not contributing enough to your 401(k). It’s also important to constantly monitor your investments, especially when the market is volatile. Checking in regularly will help keep you on track to reach your goals.
3. Inflation and Volatility.
2022 has been a whirlwind of a year when it comes to inflation and volatility. When the market is down, it’s harder to make money on your investments. It’s also completely out of your control as many global events—like the Russian invasion of Ukraine and the subsequent gas price hike—can have a major impact on the market and lead to drastic inflation.
While these are two of the most important factors when it comes to your portfolio, there are steps you can take to protect yourself. One way is to invest in assets that are less likely to be affected by inflation, such as bonds and real estate. Commodities such as gold and silver can also be a safe haven in times of economic uncertainty. Also, when in doubt, diversify. Spreading your money out gives you a better chance of earning returns even if some of your investments go down.
4. Investment FOMO.
When we see someone else make money off their investment, we often wonder if we should jump on the bandwagon. It’s very common and many investors experience FOMO or fear of missing out when they see other people’s investments doing well. But beware, According to behavioral finance experts, the social pressure to purchase a stock can lead to bad decision making and derail an investor.
These days, investing advice from news, apps and social media is constant. This phenomenon of jumping on the bandwagon is especially prevalent when it comes to cryptocurrencies and meme stocks like Dodecoin. And who could forget the Gamestop saga? Fomo is especially strong in a bull market when stocks are going up and it seems like just about everyone is making money. That may be true, but many more lost their shirts.
When it comes to investing, It’s important to remember that no one can see into the future and the risk of losing money is real no matter what the current market conditions are. But by giving yourself a reality check, thinking through every financial decision, understanding the markets and accepting there will be highs and lows and mistakes, you can significantly lower your anxiety around investing.
