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How to Calm Your Anxiety and Start Investing

7 Ways to Get Over Your Fear of Investing

Image courtesy of Unsplash.

Following the financial crisis of 2008, prospective investors (especially millennials) have been more anxious and apprehensive about investing in the stock market. For example, only one in three millennials is currently investing in stocks, with six in ten having less than $10,000 saved for retirement. About one-half of millennials surveyed claim that investing in stocks is “too risky.”

Yet, the stock market is still one of the safest and most lucrative places to invest. Adjusted for inflation, the S&P 500 has historically produced an annual return of 7 percent, which is impressive, and investors who hold their positions after a “crash” usually see their investments return to their original value within a few years. Besides, no matter how you feel about investing, saving for your retirement is vital if you want a stable financial future—and investments are better than letting your money sit around in a bank account.

But if you’re worried about the stock market, and you have anxiety about investing, how can you cross that first threshold and get started? Fortunately, there are some strategies that can help you out.

Overcoming Investment Anxiety

If you’re nervous about the prospect of investing, these are the strategies that can help you overcome those limitations and get started:

1. Get acquainted with the numbers. Instead of focusing on subjective fears about how stock prices rise and fall, or listening to doomsday predictions about how the stock market is going to crash, look at the actual numbers. Do the research, and you’ll see how steadily the stock market has grown in value for the past 100 years or so. You can even look at the price history of individual stocks, and see which ones have been the most reliable. After that, you’ll probably feel more secure about investing.

2. Talk to people who know what they’re doing. For a firsthand perspective, talk to some people you know who actively invest—preferably those who invest casually, rather than professionally. They’ll tell you about their experiences and share some tips, so you might be surprised how simple their strategies truly are. The experience will make investing seem far less intimidating.

3. Choose an area of expertise. Rather than trying to learn everything about every dimension of investing, focus on one small area of expertise. This will help you feel less overwhelmed by the amount of unknown information you’re facing, and gradually build your confidence in one key area. For example, you could focus specifically on futures trading, or shift your interest to dividend-paying stocks.

4. Immerse yourself in an online community. There are hundreds of blogs, forums, and social media circles dedicated to bringing investors together. Some are high-level, intended for expert investors and filled with technical terms. But others are warm toward novice investors, focusing on the basics. Find an online community that fits with your goals and perspectives, and immerse yourself in it, reading posts daily and contributing your own questions to the group.

5. Start small. You don’t have to invest much to get started. Most online brokerage services only require you to have a few hundred dollars to open an account. Obviously, you’ll see lower returns with a lower capital investment—but you’ll also bear far less risk. Dip your toes in the water with a small amount until you feel comfortable investing more.

6. Focus on what you know. Instead of worrying about what you don’t know, focus on what you do know. If you’re only familiar with a handful of investing strategies, or if you’re only comfortable with a few big-name companies, use those strategies and tactics to start building a presence for yourself.

7. Get other peers involved. The best way to motivate yourself to do something, and make yourself more comfortable doing it, is to get peers in your group involved. Talk to your friends about investing, and encourage them to take part in the same communities you are. Exchange new pieces of information and tips, and experiment with different tactics so you can report back and learn from each other. If you’re the only one in your social circles learning about finance and investing, you’ll be less likely to follow through with your goals.

Starting Your First Account

If you have a few hundred dollars to spare, you
can open a brokerage account, or possibly start a retirement account like a Roth IRA. Do whatever you’re most comfortable with, but make sure you
take a step forward. The only way to truly get more comfortable with the
prospect of investing is to actually invest. Once you’ve taken those first few
baby steps, the investing world will seem much smaller and more conquerable—and
you might even discover a new hobby in it.

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