Overcoming Fear On Your Path To Financial Independence

There are three key obstacles to becoming financially independent.

1) You have to earn significant amounts of money.

2) You have to save a large portion of what you earn.

3) You have to invest wisely.

When it comes to challenge three–investing–one element holds most of us back the most.  Fear.  Fear of losing money.  Fear of making a mistake.  Fear of looking like a fool.

“I’ll Invest When” Usually Means You Are Scared

How many times have you noticed an investment opportunity, but then let something get in the way?  Some excuse or challenge that caused you to hesitate.

I have a tip for you.  Whatever the reason that you told yourself, chances are 90 percent that the real reason was fear.  Fear of the unknown.  Fear that you would make a mistake and lose all your money.

There are real upsides to having fear.  I am not encouraging you to blindly invest your money without analyzing the risks and rewards.

But the point remains.  Fear gets in the way.

How To Move Beyond Fear And Begin The Investing Journey

Let’s break this down a bit and come up with strategies to cope.

“I’ll Invest When…..”

This is probably the biggest challenge.  You always have a reason why now is not a good time.  “The market is up too much…..  Housing has gone to the moon…..  I just can’t afford it right now…..  Investing is for people who grew up rich.”

Start Small, But Start Now

I have a specific suggestion for you to overcome your fear.  Start small and gradually build up with experience.  If you are afraid of the markets, put $100 into an index mutual fund.  Then, later, $1000.  Then, later, $100,000.  Etc.  Etc.  Etc.

Similarly, you want to get into real estate investing?  But a small property that you can afford to live in.  Or buy a very small rental property.

The advantage of starting small is that you can make those inevitable initial mistakes with less capital at risk.  Also, baby steps are doable.  Huge leaps tend to leave people paralyzed with fear.  They never actually move forward.

The key is to crush the “I’ll Invest When” way of thinking and replace it with: I will invest now.  I will start as small as I need to, but I will invest NOW.

But Don’t Make Boneheaded Investments

I want to add a caveat.  If you live somewhere where housing is insanely expensive, you may want to think through the positives and negatives of tying up huge amounts of your capital in one overpriced piece of real estate.

But even if that is the case, you can still buy an index fund, mutual fund, or even invest in real estate in another state or through a crowdsourcing site like FundRise.com.

I’m Talking To You

Are you the victim of your own fear?  Do you constantly think about investing, but never move forward?  Then scale down to a more manageable-sized investment that doesn’t terrify you–and move forward now.  Every year you wait is a year that compounded returns aren’t working for you.  

“In delay there lies no plenty.”