The biggest fear of investing comes from
losing a lot of money in the short-term. The bigger fear should be reaching
retirement age and not having enough.
Consider a risk-averse
investor buying low-yielding but relatively safe investments like
short-term bonds or investing in fixed
deposits that return about 9 % over time.
Compare this with the returns of investing Rs 5000.00 a in Systematic Investment Plan (SIP). After 25 years
of investing Rs 60000 per year, the safe investor earning 9 % will have just a
simple interest returns whereas the SIP investor
will have Rs 15 Lakhs in his fund. It is just the power of compounding.
Investing in the market might be the only way
to reach your long-term financial goals. The bond /FD investor in this example may come up far short
of their retirement goals due to being too conservative.
Tricks
to Getting Over Your Stock Market Fears
Here are a few tricks to get you past the
fear of investing:
Combat fear with knowledge –
Learn how the markets work. Read about
stocks, bonds, and mutual funds. Come up with a simple investment strategy
(sometimes called an “Investor Policy Statement”).
Make the leap into investing –
When you start investing, the amount you can
lose is relatively small. Learn through experience how much you can stand to
lose (your “risk tolerance”).
Keep learning about investments and refine
your strategy –
It’s
okay to change strategies if you realize you made a mistake early on in your
investing career.
Commit to long-term investments –
Don’t judge your own investment
performance after a month or a year. Stocks are long-term creatures and
sometimes take a while to mature.
Don’t let temporary losses bother you too
much –
You are not investing the cash you
need to survive tomorrow or next month. The fear of investing can be hard
to overcome. No one likes to lose money, even if it’s just temporary.
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