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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Tyrone is a passionate financial literacy advocate. He started this blog on November 2008 when he watched The Secret which talked about Law of Attraction because he wanted to become a millionaire and wanted to know how a millionaire acts. At the age of 26, he achieved his first million. To find out more about him, click here or follow him at Instagram

22 responses on “Overcome Fear in Investing

  1. 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!

    • Congrats Elmot! If you need help, just read some of my posts here under tag “stocks”. Recently, I went out of the stock market since I already recouped all my losses before. I’m losing a lot before in “paper”.

      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. 🙂

    • Actually that is what I’ll be trying to do. I will just start with a low investment to use in stock trading, though I have been playing online stock market virtual games, nothing still beats that real one.

      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?

    • Nice comment! Yeah, I agree with you. Fear constricts us to our own shelves and it hides us from various opportunities that lies ahead of us. We must be confident, face our fears and face the challenges! It’s how winners become winners!

  2. 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. 😀

  3. 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.

  4. 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.

  5. 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!!! 🙂

    • 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.

  6. 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


  7. 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:)

  8. 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.

  9. I just some of the articles and its been helpful insight specially that i’m scared right now because i just started investing my money(not that big amount but still it is money)
    Due to the coming elections, the company that i put my money in just posted an article that the investors should top slice their investment and that’s what im afraid right now because im just starting out, i dont want to withdraw my stocks because i would like to learn this process. do you think the elections affect the stocks and thus is it will recover after all?

  10. am not into stock trading but am into stock investing–long term. is this approach more secured for gains, even if, according to you, the market is high and the chance of making money is low?

  11. Hi Sir Tyrone, I really like your post. For me I would rather spend my money into investment rather than into womanising, I’m a seafarer by profession. with a rank of junior officer. Sad to say I spend almost 20 percent from my gross income into womanising before, but now I realize that If continue my vices It could not gain good result in the future. Now I changed my life, just recently I open a FAMI equity Mutual fund and when I went home next month my next plan is to invest stocks. one of my choices is BPI or Metro Bank. Hope you can give me some good idea regarding investment. thank you and more power.

    • Hi BonF, just read through the articles of my blog. I also have articles on stock market. Just read on and ask any questions if you have by commenting. Goodluck and I’m happy to hear that you are now investing wisely and cutting your vice.

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