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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16 Comments on Overcome Fear in Investing
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elmot on
Thu, 5th Nov 2009 11:26 am
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kenyantykoon on
Fri, 6th Nov 2009 1:52 am
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Dana @ Online Knowledge on
Fri, 6th Nov 2009 7:59 am
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Vic on
Fri, 6th Nov 2009 1:10 pm
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dlysen on
Sat, 7th Nov 2009 9:33 am
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Rian on
Sun, 8th Nov 2009 3:51 pm
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Jay Castillo | Foreclosure Philippines on
Mon, 9th Nov 2009 4:46 pm
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lhoy on
Tue, 10th Nov 2009 10:43 pm
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Ralph on
Sun, 15th Nov 2009 11:24 pm
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Danny Begen on
Fri, 8th Jan 2010 8:27 am
Fear is the first enemy of those who wants to have financial freedom….And ako at least ready na at naovercome ko na ang fear ko…. mag invest na ko sa stock market this month, yahoooo! Sana maging ayos!
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fear cripples not only one’s finances but also all other aspects of life. The main objective that people should have is banishing this negative feeling to hell
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Nice article. I was thinking about old adage ” do not put all egg in one basket”. I was think that the old adage tell me to diversify my invest in many basket with few egg in each. And now, i aware that i am wrong. 
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Hi Tyrone,
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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Robert Kiosaki is very good in teaching and guiding how to invest. I hear some audio book form Robert and its nice to listen before going to sleep. One of his tips is you must know how to read numbers and that will erase your fear.
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Getting a mutual fund pose very little risk. You can try to apply for one locally, initial investment is really cheap at P10000
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I agree with Vic, taking calculated risks is key. I guess I’m ready to face my fears as I am putting my money where my mouth is. I have already resigned from my day job effective end of December 2009. Based on my calculations, my passive income is just enough to replace my active income and my emergency fund is also intact in spite of Ondoy. I hope to grow my passive income with the additional time at my disposal this coming new year. Advanced Happy New Year to all of us and may God bless us all!!! 
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Tyrone Reply:
November 9th, 2009 at 5:21 pm
That is nice to hear Jay. You are already “retired” from corporate life. I hope to be able to retire also when I reached my 40s. As of now, I am building assets that would provide passive income and would eventually replace my active income in my day job.
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hi! sir tyrone,maybe you could help me start having a passive income by investing on mutual funds and others. pls give me names of companys that accept investment for mutual funds for as low as10,000
tnx
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Tyrone Reply:
November 11th, 2009 at 2:28 pm
Hi Lhoy, I would suggest you to visit the Philippine mutual funds website and you can inquire from the numbers listed when you go the fund’s name:
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.
[Reply]
Fear of any kind is my enemy. I fight it as if my life depends on it. The fear of investing is a fear of loss. If a person is holding on to something so much that they are afraid to risk, they are already half way dead! Nice post. Thanks for letting me vent on your blog:)
[Reply]
Just thinking about stuff like this gives me a better sense of what I’m doing. Sites like this are really helping people who just don’t have anywhere else to get this kind of information.
[Reply]
Tell me what you're thinking...
and oh, if you want a pic to show with your comment, go get a gravatar!
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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.