Hey you! It’s Adventago here, I was watching a video From Minority Mindset by video host: Jaspreet Singh, and he quickly went over something called analysis paralysis, in investing in the stock market.
And one of the comments was asking, “Hey Jaspreet Singh is it normal to get to the point where you want to invest, but then you get so fearful that you do not invest your money at all?”.
I thought that was a fascinating question, because it kind of reminded me of the dread and fear that I had back when I started my financial literacy journey towards investing my own money.
I remember making my first investment, I bought into a stock that had gone down significantly in value, and I did it partly because I saw a YouTube video talking about how you must get into the stock market right now! And I just wanted to get involved.
This older comment reminded me of what we are currently facing at this very moment in time where we have seen historic falls in the stock market, and I can almost imagine my younger self feeling terrified.
Except for this time around I have a very different view of how the stock market operates and what investing’s all about.
So, today I’m going to be sharing with you a few golden must-have tips on how to overcome your fear of the stock market, and to get started investing for your future.
Investing holds a particularly important key in helping you achieve your future long-term goals.
I hope, by sharing these tips today, you’ll be able to feel a lot more comfortable when it comes to investing your money and hopefully being able to take that step.
If you’re somebody who, it’s your first time, maybe starting investing, or, if it’s something that you’ve maybe done in the past and might have been scared from having a go at doing again then you need to read this immediately.
Ok! Let’s dive straight in, and look at how I would consider going beyond the fear of investing and getting you started with investing your money today!
The very first thing to do is to…
1. Start to understand exactly how the stock market works.
There’s nothing worse than putting your money towards something without having an understanding, of how that thing works.
Now the stock market can seem very complicated, but when simplified and viewed from the perspective of a marketplace where people come together to invest, you always have buyers and you always have sellers of various types of assets, mainly equities and bonds.
There are other things that you can also invest in, but keeping it simple, understanding the fundamentals of different asset classes and the roles that those various asset classes play in a simple portfolio is a very good way to start to understand what the stock market’s about and how it can go about working for you.
There are countless detailed blog posts and videos, which have been really, really popular, that can help you discover how to get started investing in the stock market for beginners.
Many people have spent a great deal of time explaining step-by-step what the stock market’s about, what the different assets are that you can get involved in the stock market, what type of roles they play, and what sort of account you can take to explore in order to get started with investing.
Make sure to click the button above right now if you want to uncover more.
What I hope you learn from understanding what the stock market’s about is that the stock market historically has been about ups and downs.
There will always be ups and downs with the stock market, but if you look over a long enough period of time, the stock market has historically gone upwards.
Even with the stock market at historic lows at the moment, I can almost guarantee that very shortly you will see the stock market rebounding and heading back upwards, as various economies pick up around the globe.
The second way to overcome the fear of investing is to…
2. Consider investing only for the long term.
Now, I’m going to be brutally honest with you, if you’ve got money right now that you would love to invest and put to work because everybody else is investing, and you think you’re going to need that money in the next one month, three months, or six months, do not invest that money through the stock market.
You should really, only be investing your money if you are thinking long-term, especially in a climate like this where we are at historic lows in the stock market at this very moment.
Think long-term, because money needs time to get past the ups and downs, and the volatility that comes naturally with the stock market in order to make its way up and generate that return that you need in order to achieve your goals.
The longer the time horizon you’ve got, the better, because money has a lot more time to build up the momentum, and for the income that you potentially reinvest through the stock market to compound and help you generate a healthy total return.
The third way to overcome your fear of investing is to…
3. Choose a credible strategy.
Now, an investment strategy is essentially the way you approach distributing your funds.
Some people might choose to invest their money by trading through the markets this is when you’re buying and selling out of the market.
Some people might choose to buy and hold for the long term.
Some people might choose to invest with dividends by dividend income investing.
And other people might choose to look for assets that are below market value, and therefore invest in that, and then capitalize on the extra value that they might have identified.
Choosing a credible investment strategy is critical, because it helps you make sure that your money is in the right type of assets, and those assets are exposed to the right environment in order for your money to work best for you.
I personally prefer to invest my money choosing a passive investing strategy, the reason for that is because I prefer to focus on learning how investing works, putting my money to work myself, and focusing a lot of my efforts in making sure that I’m investing in assets that aren’t costing me a lot of money over time.
For example, focusing on fees, but also making sure that my money is invested globally and as diversified as possible.
Such that I then minimize the risk that I can get exposed to very specific companies, now, of course, with diversification you also have exposure to the general markets.
Tied to this idea of choosing a credible investment strategy is your asset allocation, broadly speaking, you can invest your money in equities and bonds.
So almost choosing the correct weight between equities and bonds should give you the right exposure to the right type of assets to be able to generate the returns you need to achieve your goals.
The real weight in between equities and bonds depends on your attitude to risk, if you’re somebody who’s risk-loving and has a long enough time horizon.
It will serve you well to have more of your allocation allocated to equities rather than to bonds, because you’ll be exposing your money to sufficient risk enough to generate a decent return as time passes.
But if you’re interested in this idea of passive investing, I’ve made loads of blog posts before, looking, and explaining to you how they work, so that you can take that next step in a reasonable and timely fashion.
The fourth point I’ll make is to…
4. Start small.
Don’t throw your life savings into investing through the stock market at one go, especially if you’re somebody who has historically feared investing through the stock market, or someone who is at the very beginning stages.
At this very moment, my best recommendation would be to spend some time assessing your current personal life, and the need for cash flow in your life at the minute.
Make sure you’ve assessed the short-term need for cash flows, and then look beyond that and assess how much more you’ve got leftover in order for you to start to invest through the stock market for the long term.
The key here is making sure you’ve gotten those cash flow elements correct, and where possible, be as conservative as possible.
Because really and truly, with the current situation we’re in at this moment with the economic downturn, we have no idea how long that may last.
The more you have some exposure to cash, in the event that things you don’t predict suddenly start to happen and you need to respond with available cash flow.
Make sure to assess that, and then what’s leftover, is what you can then start to use to drip feed into the stock market in order to gradually gain some comfort.
This also has the advantage of giving you some diversification, because you would be buying into the stock market at different pricing levels.
By all means, if you’re somebody who’s risk-loving and you really want to go all-in and invest your money in order to take advantage of maybe a large price drop, feel free to do that.
But my recommendation is to always start small if you are a complete beginner, or somebody who’s been fearful about the stock market, and then gradually ease your way in.
Now, the fifth thing I’d recommend is to…
5. Automate your investing in order to remove the emotional biases that come with deciding when to invest, or trying to time the market, and so on.
When you automate your investing, you adjust investing no matter the weather, whether the stock market’s low, or whether things are high up.
You have developed essentially a system for making sure that you are consistently investing through the stock market.
I highly recommend this, because it makes the job easier for somebody who’s new to investing, since all you do is set up an automated standing order or some form of payment into your investing account.
And what that does is you’re essentially buying into the same funds you might have identified, or into the same securities that you might have identified, but doing it on a consistent basis.
And the key there is having that time in the market rather than always looking out for and joining into the many internet forums out there of people who are trying to predict when we are at the bottom of the market.
Focus on making your investing as automated as possible and therefore as consistent as possible.
And what that does is it makes sure that you have your foot in the market at all times, and you are in it for the long-term ride.
Now, just to summarize that, with all these five points…
When you combine all of that, you’ll find yourself being somebody who gains investing confidence to be able to take that leap and hopefully make your first and what I hope will become your ongoing investing journey.
I really hope you’ve enjoyed my blog post today on the 5 Dead Simple Steps To Overcoming Your Stock Market Investment Fear 🙁 and getting started with investing.
Take care my entrepreneur friend, and I will see you in another blog post, bye for now.
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