Are you afraid to invest? Here are three tips to overcome investing anxiety
For many people, investing seems difficult. Numerous studies have shown that most people around the world today do not invest because they lack the knowledge, but their confidence in making investment decisions need work.
According to a recent global survey of what people like to invest in, here are the four most common factors shared by people around the world:
- I’m not sure about investing after the stock market crash a few years ago.
- I know I need to invest, but I don’t want to lose money.
- I think about starting investing almost every day, but I can’t.
- I want a better return on my money, but I’m not sure about the risk.
The first jump can be overwhelming or can trigger many “what if” scenarios, but you may begin to feel more comfortable when you consider these tips to get started.
A. Don’t invest too much money when you start investing, start with a small amount
Determine the amount you feel comfortable investing in and choose a goal that matches where you are now – and where you want to be.
If your investment goals change over time, you can change your plan. Start with the amount of money you can lose and take less risk in learning. As you watch your balance grow, you may be more comfortable investing as much as possible.
B. Make investment expectations or goals as specific as possible
Investment goals do not have to be complicated.
Your goal could be to have 1 million bucks in assets that you can convert into money when you get to 65 to retire, or it could be a specific goal like 100,000 bucks per car of your choice for the next two years.
Or financial planners often say that you have to ask yourself where you want to be financially in 1, 5 or 10 years. Different types of investments work differently, which means you can set target dates and financial goals for each of your assets.
C. Consider your risk tolerance and understand the risks and benefits of investing.
Your investment is unlikely to change much from day to day or even month to month. But even if they do, experienced investors warn investors that you should try not to be intimidated. It is normal for market cycles (market growth and decline) to fluctuate and there is no one-size-fits-all approach.
The various time horizons (the timeline of the investment or how long you plan to hold the asset before selling it) vary and may not correspond to market cycles, but it is important to realize that market time is more important.
Remember that all losses are only on paper – until you sell.
How can I decide where to invest? Start with a ‘death-match investment’ to find the best investment
You can learn a lot about investing by setting up what your stock market experts call a “death-match investment” in your portfolio. In this setting, the investments you choose compete for the best return and balance.
It starts by investing the same amount of money in multiple investment funds at the same time. This makes it easy to control how your investments are performing, just by looking at the fund balances.
How this approach benefits your portfolio in four ways:
- You will gain experience in choosing more investments.
- You can learn by looking at what different investments have made in relation to each other over time.
- The risk of your portfolio is reduced by diversification.
- Based on the result of your investment performance, you can invest more money in your most efficient funds.
Although you can choose funds from the same investment category, you can learn much more by choosing funds from different categories. In addition, if you choose different funds, you will build a more diverse portfolio, which will reduce your risk if one investment sector fails.
Some of the most important criteria to consider when selecting funds are:
• Investment objective: Do you want an aggressive growth fund that requires higher risk of achieving higher returns, or would you prefer a more conservative fund that is more likely to protect your investment?
• Active versus passive management: Do you want a fund that has a fund manager to try to maximize returns, or a passive fund that monitors only a portion of the market?
• Expenses (cost ratio): Funds with shorter fees are best for stimulating the growth of your investment over time, but other types of investments are more complex and are likely to have higher fees. Actively managed funds have higher fees than passive funds and index funds.
• Return (performance): While past performance does not predict future results, most investors are likely to choose high-return funds that have performed well compared to similar funds over the past year to five years.
• Group management: Some investors prefer funds that have had a consistent management group for several years.
What are some of the key behaviors to consider when choosing funds? Invest the same amount in each fund where the fare is better
For the investment funds you choose, the next step is to invest the same amount in each. For example, to invest 2,000 bucks with 4 funds in your deathmatch, put exactly 500 bucks into each fund to start the competition.
The reason for placing the same amount on multiple investments on the same day is to make it easier to compare what your funds have done, simply by checking the fund balances every hour.
You don’t have to track anything or calculate returns to check what they did.
Which fund has the largest balance wins. When you look at your funding options, it will be a challenge to find out who is the best. This format makes it easy to find out which investments are working well, simply by checking fund balances.
Over time, some of your investments may be better than others. You can choose to leave the best funds operating in the area and start a new game with funds from investments that are also not well established.
Bottom Line? While depositing money into a savings account seems like a quick choice, it probably won’t grow too much over time, and inflation and account costs can reduce the value of your money. Investing, on the other hand, offers a way to increase your savings to some of life’s biggest milestones.
Investing can play an important role in securing your goals. It can motivate your savings, with which you can fulfill desires, such as buying a car, traveling, starting a dream project or even buying a house.
It can also mean spending your retirement later in life. Once you start, you will feel better about yourself as an investor.
How much risk are you willing to take?
Are you interested in specific sectors, geographical regions or orders?
How much are you interested in the process and how much time do you want to devote to it?
As you learn and gain confidence, you may want to invest more or try different types of investments.