How To Minimize Fear With Investing

It’s natural to have feelings of fear around making investment decisions. Where should you put your money? How much and how long will contributions continue? When will you exit, what are the limitations and taxes? What about liquidity? What are the costs and are they worth it? What might be available when it’s necessary?

Fear of the unknown and how to oversee investment decisions are real and can be challenging to all investors. Answering the above questions (and more), making decisions, and ultimately revisiting your choices over time is necessary. Regret can sneak in along the way if expectations don’t match up with actual returns.  

There’s a better way to manage fear and increase your confidence. It begins with taking an inventory of all your monies, cash reserves, current income, and debt levels. How strong is your financial house right now?

Recently, I met with a prospective client who arrived with a folder of handwritten notes, statements, and a recommendation from another advisor. She was asking me what should be done with this account, that account, and wanted my opinion as a fee-only planner.

After listening and asking some clarifying questions, I gently told her, I don’t know, yet. She was surprised by my response and that I wasn’t ready to provide a recommendation.

My candid reaction was honest and true. I don’t know what she was looking to do after chatting for thirty minutes. I sensed she wasn’t entirely clear on her wants either. Making decisions in a vacuum without perspective is what allows fear to arrive and expand.

There were a significant number of missing pieces to her puzzle. These pieces and the photo on the box are necessary before a suggestion can be shared. I could see the frustration slowly appearing on her face. She wanted answers now. Why can’t financial decisions be straight forward and knowable?  

I totally get it and can relate. We live in a fast-paced world where our attention is fleeting. We want answers now so we can move on to the next decision. Our brains weren’t designed to manage the stimuli we are inundated with daily. Fear and uncertainty are present with investing because most of us don’t have a process to follow.    

Without practice and a routine, of course you will second guess or defer investment decisions to another day. When it comes to money, spending, and investment selection, it’s critical to have a road map to follow.

This can’t be gathered from an introductory chat. It’s going to take a little more time, curiosity, and discovery to figure out exactly what you want. Then once your choices are found and implemented, the real work begins. Setting aside time for reflection periodically to ensure what you initially wanted is still important and worthwhile. Spoiler, it may not be and that’s ok.

The real value of a relationship with a financial planner is not where to invest your money or better returns. Instead, it’s a partnership that follows a repeatable process that manages your expectations. The planner shows empathy and understanding in all conversations so decisions may arrive when the investor is ready.   

Perspective is equally important as this needs to be shared too. From time to time, all of us will forget where we’ve been and what we want. It’s helpful to have a friend provide perspective in all markets, up and down.

It’s so easy to overlook and overthink the next decision as it consumes our energy and attention. Perspective on what matters (and doesn’t) is priceless and goes a long way to lessening fear when investing.

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