Fear and Investing
Among the many different emotions human beings experience throughout our lives, fear just might be the most unique and intriguing. In our hunter and gatherer days, a healthy sense of fear was likely extremely beneficial in keeping us out of harm’s way. However, although we now rely on supermarkets rather than woolly mammoths for our sustenance, that sense of fear can still dominate our lives.
A place this notion is exemplified is in investing. The markets don’t naturally lend themselves to the squeamish and faint of heart, displaying stretches of volatility that can make even the most well-seasoned investors want to grab a parachute and jump out of the metaphorical plane.
To the average investor, one that might lack the thorough perspective and financial history of that well-seasoned investor, abiding by the buy-and-hold strategy that is preached from many a mountaintop – particularly in the face of choppy financial seas – can feel like an overwhelming endeavor.
However, as queasy and anxiety ridden as the markets can sometimes make you feel, maintaining an appropriate psychological and emotional approach will always be to your benefit, especially in the face of overwhelming fear.
Keep an Open Mind
In this dynamic and demanding world, society can feel like it’s capable of stepping over a cliff at any given moment. Although we certainly live in trying times, life has always been challenging, no matter the time or place. In the modern era, the specific brand of fear created by the investment markets is, to a large extent, created by a lack of control and an unknown future.
The great unknown has always been a constant, however, including in even darker hours over the past century, so remembering that both societies and financial markets have been able to withstand many catastrophes in the past to only rebound should help put your investing fears in a proper perspective.
Dampen Your Fears With a Group Think Approach
In any regard, including investing, fear can be blinding and prevent you from making sound decisions. That notion is precisely why emotions can still dominate the markets, even with our sophisticated analytical and technological advancements in investing.
For that reason, when fear rears its ugly head and just the thought of your investments triggers insomnia, it might be best to help reduce the risk from making rash decisions by seeking the counsel of people you trust – including your spouse, or others that might have a different perspective on current market trends. Such guidance might include strategic solutions to your fear like better diversifying your assets, revisiting your allocation, or dollar cost averaging into the market rather than diving in head first.
Ultimately, if after seeking the guidance of those trusted individuals, selling some shares and heading for the hills still seems like a wise decision, then so be it. However, relying on others to see through the blinders placed by fear can help navigate you through even the most volatile of waters reducing the impact of your financial well-being.
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Gary Marriage Jr. is the founder and CEO of Nature Coast Financial Advisors, which educates retirees on how to protect their assets, increase their income and reduce their taxes. Marriage is a national speaker, delivering solutions for pre-retirees, business owners and seniors on the areas affecting their retirement and estates. He is an approved member of the National Ethics Bureau, and has been featured in “America’s Top Hometown Financial Advisors 2011” and was selected to contribute to a book with Steve Forbes titled “Successonomics”
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