Fear of investing is one of the main reasons why many people don't invest. Fear of loss, fear of making a mistake, and even fear of not being able to manage their finances optimally are often the reasons why people don't invest at all.
However, with high inflation rates, the value of money sitting idle in accounts will continue to erode. Furthermore, when you see a large account balance, it's not uncommon for the urge to shop to arise, triggering wasteful spending that negatively impacts your financial health. Knowing this, you need to quickly find ways to overcome your fear of investing so you can quickly experience the financial benefits.
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| Remove the Inhibitors! Here are 4 Ways to Overcome the Fear of Investing |
Don't worry, here are four ways to overcome your fear of investing to feel more confident and calm when investing to secure profits.
1. Ensure Your Financial Condition is Prime
Before you start investing, you need to ensure your financial condition is prime. What should you pay attention to? First, secure your finances by having an emergency fund of an ideal amount, for example, 6 to 12 monthly expenses, so that urgent needs can be met smoothly.
Next, evaluate your budget by cutting non-essential expenses to free up more of your budget for investment. Also, avoid debt or credit for non-productive purposes, and pay off any outstanding debt you may be carrying.
Equally important, prioritize your financial goals, both short-term and long-term, to be more interested in investing and pursue them optimally. You also need to protect your finances from unexpected problems with insurance.
Ideally, prioritize health and life insurance as mandatory protection priorities. Then, consider other insurance needs, such as property and vehicle insurance, if necessary. By ensuring your financial condition is secure and prime, you will find it easier to overcome your fear of investing.
2. The Best Time to Start Investing Is Now
Furthermore, one way to overcome your fear of investing is to realize that the best time to start is now. For those who don't know, investment profit opportunities can be more optimal if done over a long period of time, especially if you take advantage of the compounding effect by reinvesting the returns.
Over a long time horizon, such as 5 or 10 years, economic conditions tend to experience growth and companies are able to generate significant profits. These company profits can then increase their share prices and provide capital gains for investors.
If you're still hesitant about investing, start with a small amount and gradually build your portfolio. For example, you can start investing in mutual funds, which can be purchased with capital starting from just 10,000 rupiah. While learning, get used to investing and realize if there's growth in the value of the capital you've invested so far.
Also Read: Preparing to Become Well-off! Here are 6 Reasons Why the Younger Generation Must Be Investment Literate
3. Understand Your Risk Profile and Investment Goals
Many don't realize that all investors have different risk tolerances. Each investor's investment goals are certainly diverse and need to be tailored to their financial situation. With all these differences, investment strategies and instrument recommendations will also vary from individual to individual.
Knowing this, to overcome your fear of investing, you need to first identify your risk profile and desired goals. By understanding these two factors, you can more easily determine the best investment plan to achieve your financial goals and timeframe.
In general, investor risk profiles can be divided into three categories: conservative, moderate, and aggressive. Conservative investors tend to have a low risk tolerance and are advised to choose stable and safe instruments, such as deposits and money market mutual funds.
Meanwhile, moderate investors' risk tolerance typically falls in the middle spectrum, where they are more willing to take risks up to a certain point. For moderate investors, recommended investment instruments are bonds and fixed-income mutual funds, which have a moderate level of risk.
Aggressive investors, on the other hand, are willing to take investment risks to lock in higher potential returns, for example, in stocks and crypto. However, regarding risk profiles, investors need to evaluate periodically because risk tolerance can change over time depending on age and financial condition.
4. Align Your Investment Plan with Your Goals
After understanding your risk profile and desired goals, the next step in overcoming your fear of investing is to develop a plan. Of course, align your investment plan with your goals and risk profile to avoid stress and financial pressure while investing.
When in doubt, consult a professional to determine the best investment plan for you. This way, you can more easily overcome your investment fears and achieve your financial goals for a more prosperous future.
Don't Hinder Your Financial Dreams, Overcome Your Investment Fears Now!
Investing fears often hinder people from growing their capital and achieving their financial dreams in the future. However, these fears can be easily overcome by focusing on long-term goals and understanding your risk tolerance. So, don't let fear hinder you from building wealth through investing today by implementing the four methods explained above.
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