Overcome Fear in Investing
Without doubt, each of us don’t want to invest because we are afraid of losing our hard earned money. The fear of losing money is the main reason a huge percentage of the public struggles financially. But fear isn’t the real problem. It’s how people handle fear that matters. Kiyosaki tells people that the primary difference between rich people and poor people is how they handle the fear of losing money. Some people, when hit with a financial loss, give up. Others transform the loss into a win. As John D. Rockefeller said, “I always tried to turn every disaster into an opportunity.” Losers are defeated by failure. Winners are inspired by it.
Kiyosaki often commented that the real reason for lack of financial success was that people played it too safe. “People are so afraid of losing money that they do lose it,” he would say. If they have some cash, they buy big houses and big cars rather than big investments. Or they invest all of their money in balanced portfolios—in CDs and low-yield bonds and mutual funds and a few individual stocks. These are people, driven by fear, playing not to lose.
Rich Dad Tip:
“The primary difference between rich people and poor people is how they handle fear.”
Of course, a balanced portfolio is a lot better than no portfolio at all. It seeks safety through diversity. Having a financial plan for security and comfort first are important. But if you have any desire to become rich, you must focus, not diversify. You must put a lot of eggs in a few baskets rather than putting a few eggs in many.
FEAR: I’ll lose all my money if I invest in anything riskier than CDs, bonds, and mutual funds.
FACT: If you lose some money, you can learn from the failure. Once you become an educated investor you’ll be positioned to reap potentially huge rewards.
FREEDOM: Financial failure can be transformed into financial gain.
If the prospect of failure frightens you, then play it safe. Keep your daytime job until you have enough cash to buy bonds and mutual funds and consult with a financial planner. But if the prospect of failure inspires you to fight and win, maybe you should challenge yourself to change your financial habits. Educate yourself and take some financial risks. The more education you have, the less risk there will be.
In investing, the higher the risk, the higher the reward. You won’t become successful if you didn’t take risks and part of that risk is the fear of losing money. Personally, when I increased my financial education, my risk appetite also increased. I started investing in mutual funds and unit investment trust funds and then went to a riskier type of investment - the stock market. As I increased my business acumen, sooner or later, I will begin engaging myself into business. The more financially educated I am, the less the fear that I am feeling about.
Source: Robert Kiyosaki’s Coaching Program
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November 5th, 2009 at 11:26 am
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Tyrone Reply:
November 5th, 2009 at 11:39 am
I’m guilty of this FEAR. The stock market is quite high as of now and the probability of loss is high while the probability of gain is low.
But you can always start small and learn the trade. Experience is always the best teacher.
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elmot Reply:
November 16th, 2009 at 11:11 am
I am though trying to look for free online charts of psei stocks…I saw yehey.com before having that one on their financial section but now I can’t see it on their site. Any recommended sites?
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Tyrone Reply:
November 16th, 2009 at 11:56 am
http://www.pse.org.ph
You will see there a daily graph of the stock index and also a graph of individual share prices.
November 6th, 2009 at 1:52 am
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Tyrone Reply:
November 6th, 2009 at 8:37 am
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November 6th, 2009 at 7:59 am
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November 6th, 2009 at 1:10 pm
That’s a great personal finance and investing article. You are right the fear of losing money is one major reason in investing failure. As for me, having no money to invest is my initial problem. Lol.
Seriously, to be a great investor, we should learn how to calculate risk and face those risk. The saying…no pain no gain is not absolute. We can actually be precise and avoid losing with our investments by using quantifiable factors. Why can airplanes fly and takeoff safely for most of the time? It’s becuase of “precision”. Thus, everything is calculated from direction, navigation to destination. Of course with an addition of a simple yet sincere prayer from above.
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November 7th, 2009 at 9:33 am
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November 8th, 2009 at 3:51 pm
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November 9th, 2009 at 4:46 pm
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Tyrone Reply:
November 9th, 2009 at 5:21 pm
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November 10th, 2009 at 10:43 pm
tnx
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Tyrone Reply:
November 11th, 2009 at 2:28 pm
http://www.icap.com.ph/factsfignavps.asp
Alternatively, you can also visit the Unit Investment Trust Fund (UITF) website. Go to each bank’s name and to each fund profile that they are offering. The minimum participation is the minimum amount required.
http://www.uitf.com.ph
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November 15th, 2009 at 11:24 pm
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January 8th, 2010 at 8:27 am
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