How to get over the fear of Investing?

Most people shy away from investing because they are afraid of losing their hard earned money. No doubt, losing your hard earned money is a frightening prospect. But try to recollect, you were equally frightened when you went to school for the first time or when you were learning to drive.

Investing in stock markets can be a risky affair. But not investing can prove a bigger risk. Considering the rate of inflation, the real value of your money is depreciating everyday. If you let your money sit idle in your savings bank account or at the most invest in Fixed Deposits, you are not helping your money grow much.

The younger you start investing, the better it is. Consider this recent stock market fall as “upto 50% off” sale. Now is a great time to invest before the stock markets start climbing again and you feel left out.

Below are the common excuses people give for not investing and strategies to overcome them:

1. I don’t want to lose all my money
If you don’t want to lose all your money, the strategy is pretty simple. Don’t put all your eggs in the same basket. Diversify. Mutual Fund is an excellent vehicle to achieve diversification. A typical mutual fund scheme invests in 50-60 different stocks. Some examples of good diversified mutual fund schemes are: Reliance Growth Fund, SBI Magnum Contra, DSP ML Equity, HSBC Equity, etc.

2. I don’t know the right time to invest
No one knows the “right time” to invest. As such there is never a right time to invest. No one can predict the exact time for market rise or fall. The best strategy to follow is to invest regularly. By doing that you take advantage of “Rupee Cost Averaging”. Rupee Cost Averaging strategy involves investing a fixed amount regularly. For this fixed amount, you end up buying less quantity when the prices are high and more quantity when the prices are low. Systematic Investment Plans (or SIPs as they are popularly known) of mutual fund schemes help you achieve Rupee Cost Averaging

3. Ups and downs of investing give me sleepless nights
You should never get obsessed with the daily prices. Tracking the prices daily not only will make you lose sleep but also tempts you to tinker with your investments every now and then. History proves that a passive investor ends up making more money than an active trader. But that does not mean you should never re-evaluate your investments. Do it on a periodic basis and not daily.

4. I don’t have the time and knowledge to manage my portfolio well
This is a really lame excuse. For people who don’t have the time or knowledge of investing, there is professional help available. There are banks, broking houses as well as qualified independent financial guides (like EquiTipz) who offer investment advisory services.

With large institutions like banks, your investment options become limited or biased because these intitutions are generally associated with only a few fund houses and insurance companies. Whereas with independent financial advisors, you are free to choose invesment products from any company you like.

5. What if need the money?
You should plan your investments in such a way that a part of your money is invested in liquid investments (viz. money market mutual funds or liquid funds) which can redeemed at a short notice without any charge. The remaining money can be divided into short term and long term investments.

Also Read: Important things to know as a new Investor