For beginners, financial investing may seem a little daunting. There is a lot of jargon that seems complex and then there were all the financial scandals that filled the headlines after the 2008 financial crisis. This may put some people off. If you are one of these people, you should read this article, as we discuss three common fears about investing and why they are entirely unfounded.
If you are a first-time investor, financial investing may seem daunting.
1. I will lose all my money
A common fear first-time investors have is the fear of losing all their money. The reality is, if you invest your money responsibly, it is very hard to lose all your invested capital. The key is to diversify your investment portfolio by investing in different assets, such as stocks, bonds, and real estate, for example, to reduce your overall investment risk. If instead, you only buy one stock, then you could lose all your money if that company goes bankrupt. However, if you diversify and choose safer investments, it is effectively impossible to lose all invested capital.
Invest responsibly and it will be hard to lose all your invested capital
2. I will get ripped off
Another fear first time investors have is the fear of getting ripped off. Everyone has read about the Bernie Madoff scandal that unraveled following the 2008 financial crisis where investors lost heaps of money when his investment fund turned out to be a Ponzi scheme. However, making a financial loss due to the involvement in a scam can easily be avoided by diversifying your investments across asset classes and financial services providers. Also, financial regulations have tightened substantially since the 2008 financial crisis, which means that the chance of falling victim to an investment scam is now very limited.
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3. I don’t know enough about investing to make it work
Not knowing enough about investing to make it work for you is another fear that is entirely unfounded. The reality is that you can choose financial advisors who can help you every step along the way during the investment process. Whether you want to purchase a portfolio of stocks and bonds or whether you want to purchase your first investment property, there are trustworthy advisors that can guide you to make the right investment decisions.
Investing your excess capital is the number one way to building wealth. Don’t let fears or concerns hold you back from making your first investment.
