What to Know Before You Invest If You're Scared to Lose Money
I get it. Investing can feel intimidating—especially if you're afraid of losing money. And you're not alone in feeling this way. A Fidelity Investments survey revealed that only 26% of women feel confident about their investing abilities. As a holistic wealth coach, I see this fear often and want to help you overcome it.
The truth is, building wealth doesn’t have to feel overwhelming. In this post, we’ll unpack the fear of investing, highlight the benefits of putting your money to work, and outline practical steps to help you start investing with confidence.
Understanding the Fear of Investing
Understanding the Fear of Investing
The fear of losing money is one of the biggest reasons many people—and especially women—avoid investing. This fear often stems from two things: a lack of understanding of how investing works and concerns about the volatility of the stock market.
Let’s be honest: it doesn’t help that news of market crashes and economic downturns makes investing feel more like gambling than a sound financial strategy.
Here’s what you need to know: while the market does fluctuate, losing all your money is extremely unlikely when you invest wisely. In fact, the stock market has consistently grown over time, The average stock market return is about 10% per year, according to the S&P 500 index.
By educating yourself on market cycles, practicing patience, and diversifying your investments, you can reduce your risks and grow your wealth steadily over time.
The Benefits of Investing
Investing isn’t just about making money—it’s about creating opportunities for yourself and buying back time. Here are three key benefits of investing:
1. Buying Back Time
When you invest, your money works for you. Through the power of compounding, even small amounts can grow significantly over time. This means you can achieve financial freedom faster, leaving you more time to focus on what truly matters.
2. Building Wealth Faster
Savings accounts might feel safe, but they rarely keep pace with inflation. Investing in assets like stocks, bonds, and real estate offers the potential for higher returns, helping you build wealth faster than simply saving alone.
3. Beating Inflation
Inflation slowly erodes your money’s purchasing power. Investing ensures your money grows at a rate that outpaces inflation, protecting and growing your wealth for the future.
Diversification: Your Secret to Managing Risk
Diversifying your portfolio is one of the best ways to ease the fear of investing. By spreading your money across different types of investments, industries, and regions, you reduce the impact of one poor-performing asset on your overall portfolio.
Here are a few types of investments to consider:
Stocks: Shares of ownership in individual companies.
Bonds: Loans to governments or corporations that provide interest over time.
Real Estate: Properties that generate rental income and can appreciate in value.
Mutual Funds & ETFs: Collections of stocks and bonds that automatically offer diversification.
Three Essentials for Overcoming Your Fear of Investing
1. Educate Yourself
Fear of investing often comes from fear of the unknown. Take time to learn the basics of how the stock market works, understand the risks, and explore how to build a diversified portfolio. There are plenty of books, online courses, and workshops to help you get started.
2. Create an Investment Strategy
Having a clear plan is like having a roadmap for your financial journey. Start by setting goals, whether that’s saving for retirement, buying a home, or funding a dream project. Decide if you want to manage your own investments or work with a financial advisor or robo-advisor.
3. Think Long-Term
One of the most effective ways to manage your fear of investing is to focus on the long game. Warren Buffett famously invests with the mindset that short-term fluctuations don’t matter as long as the long-term trajectory is up. Patience and discipline are your greatest allies when investing.
Practical Steps to Start Investing
Ready to take the leap? Here’s how to start:
Set Financial Goals: Define what you want to achieve with your investments.
Create a Budget: Make sure you can comfortably save and cover expenses before you invest.
Open an Investment Account: Research brokerage accounts or robo-advisors to find the best fit for you.
Start Small: Begin with a small amount you’re comfortable with and build as you gain confidence.
Monitor Your Investments: Regularly review your portfolio to ensure it aligns with your goals.
Investing doesn’t have to be scary. With the right education, strategy, and mindset, you can overcome your fear of losing money and unlock the many benefits of investing. Remember, growth takes time—but the sooner you start, the closer you’ll be to achieving your financial dreams.
Comment below and let me know your thoughts! Be sure to check out my YouTube channel for the video version of this blog post and if you're ready to take your financial wellness journey to the next level, then look below for additional coaching services and resources that can help you build lasting wealth and abundance.
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