EP 113: How To Overcome The Fear Of Investing

You're thinking about investing in the stock market but you're scared. You have some fear, you're nervous. Well, don't worry. 

I got you.

In this episode, I'm gonna break down some fears around investing in the stock market and how to remove it from the entire process. 

You can also listen on Spotify, ApplePodcasts and Stitcher

The number one fear many people have is losing money. 

Consider other financial risks you may take, such as going to a casino. We go in expecting to lose money, but go for the enjoyment and excitement it brings. We purchase lottery tickets without worry. We aren't buying a ticket saying we're scared... we are excited! If our number hits, we're millionaires! 

How do we remove the fear and bring the casino energy and excitement to the stock market? How do we change our mindset from being okay to losing money to being eager watching our investments in the market? 

Something we can remind ourselves is if you're buying a stock... you only lose money if the stock goes down. 

Something you can do to feel more comfortable investing is deciding an amount of money you would be okay with losing. What can you reasonably set aside? We go to the casino with $100, or buy a lottery ticket for $5, with the intent we could lose and be fine with it. It's the same for the stock market. 

Compare investing to what we might spend on a lottery ticket each week that may never materialize. The market could give us a potential greater payout over time. Investing in the right stock today could have the ability to change your life 10-20 years down the road.

We want to remove the pressure of being afraid to lose money. 

What happens if you pick the wrong stock and it's not going up? 

The easiest way to pick stocks is to think about a company you support. For example, if you have an iPhone or a Mac, you may want to choose Apple.  Tesla, Walmart, or Target are also great choices because they either sell the items that we need, or are leaders in their industry.  

Think about the basic necessities and where to find them. That's how to choose a good company. 

After you choose a company to invest in, the only way you could lose your money is if they went out of business. Could it happen? Sure. Is it likely to happen? No. I'm not saying you won't ever lose some money, but as long as these companies stay in business, you don't need to stress about losing all of it. 

You can also invest in an ETF, or an exchange traded fund. Instead of going in and picking individual companies, like Apple, ETFs give you the ability to buy a collection of stocks. 

Two of the most popular ETFs mirror the NASDAQ 100 and the S&P 500 (known as SPY). Putting your money in an ETF, such as SPY, would mean all 500 of those companies would have to go out of business for you to lose your money. What are the chances of that happening? 

If you are interested in learning more about ETFs, I have a blog and video talking more in detail about them. You can check it out here. 

What if you need the money before the investment matures? What if you buy these stocks or investments, and realize you need the money now.

We don't want to invest money we'll need right away. The market is not going to move on our timeline. We should only invest in the market the money we can afford to lose that we don't need right now.

You want to be able to put your money in the market and let it sit. Year one, you might be down 5%. Year two, maybe you're down 6%. But year three, you could be up 22%. 

It might not happen right away... allow the market to do what it does and mature.

If we lose money, we think we look stupid because we lost. If you invested money and lost, you don't look stupid. To me, you look like a hero. 

It's so easy to sit on the sidelines. Imagine a world where no one took risks? We wouldn't have better cars, let alone electric ones. No one would be taking the risk to develop life saving vaccines, medications, or surgeries. Taking a risk takes confidence and guts. 

We should support each other whether we are winning or losing. We need to encourage each other to take risks, even if they don't pay out. We need to ask ourselves the important questions so we can learn from it and come back bigger, better, and stronger so we don't lose the next time.

We should be proud of the calculated risk we took.  Think about all the valuable experience you just gained. Think about the big players in the investment world - do you think they never lost money? 

Feeling stupid is usually a symptom of losing money or not knowing what you are doing, both of which you can control. Get the education and paper trade to practice. The purpose is to learn from the loss and get back in there. 

I want you to take inventory of why you are scared to invest.

Where is that fear coming from and how can you overcome it? 

I want to remind you that even if you lose money, you're a hero for taking that risk. Surround yourself with others like you to discuss the market and trades you're making, good or bad. 

Join our community to learn more and talk about the market.

Check us out at Power Trades University.