Friday, September 25, 2015

4 Ways to Overcome Psychological Obstacles to Investing (Guest Post)

While saving ensures you’ll have funds for emergencies and the occasional holiday, investing sees to it that you’ll have a comfortable retirement. Stocks, bonds, real property, and other investment options are some of the best ways to grow your money passively.

However, many Singaporeans either don’t want to or are apprehensive to do it. Based on an investment survey, 70% of the respondents believe income is essential when investing, yet only 59% invest for retirement.

One of the foremost reasons is the mindset. We fear many things: losing our house, being buried in debt, not having enough money for other things, etc.

The good news is there are many ways to get past your anxiety and eventually overcome these psychological hurdles to investing. 

1. Understand the source of your fear

What causes your fear of losing a house? What is in stock market that you don’t want to deal with?
Fear of investments can be caused by many things:
  • Personal experience
  • Experiences of others
  • Media reports such as economic collapse or investment scams
  • Lack of knowledge or education
  • Complexity of investing options
When you have thoroughly analysed the root cause of your fear, you’ll know what to do next. For instance, if you don’t know much about investing, resources from books to seminars are aplenty.

2. Know your risk profile

All types of investing options have certain risks. It’s up to you to identify how much risk you’re willing to take. For example, if you’re concerned about losing a lot of money, consider bonds, mutual funds, or even money market funds, which have low to moderate risk. If you’re worried about not getting enough from your investments, boost it through putting money in stocks, although this option involves higher risks.

3. Invest in reputable options and institutions

It certainly pays to put your money on trusted banks and choices. Although you can expect to spend fees such as brokerage, rest assured you have highly experienced and knowledgeable professionals working with and for you. This way, you don’t have to worry too much about your money’s growth.

4. Be smart with money

You’ll feel more confident to invest if you know that all other aspects of your finances are covered well and are doing great. You have your emergency fund to help you during very tough times, a mortgage you can afford to pay, and a lifestyle that is just within your means.

You also need to be smart with credit cards since they can potentially trap you in a debt cycle and drain your savings and even investment income. For a start, learn to compare credit card deals in Singapore. Get to know their features, conditions, and fees.

Also, don’t forget to:
  • Pay your credit card dues on time and in full.
  • Consider a balance transfer card to take advantage of possibly lower interest rates in the future.
  • Spend according to your budget or what you can afford.
  • Be cautious when using credit cards overseas due to differences in exchange rates.
You’ve laboured long and hard for many years. It’s time to make money work on your behalf. Conquer the fear and invest today.

This article is contributed by Allyson of

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