Updated: May 16, 2020
Nobody wants to lose money. And when it comes to investing, this is a possibility. Unfortunately, this fact has turned a lot of people off and made them choose to not invest at all.
I used to be like that, too. I was a strong believer that when it comes to my hard-earned money, “It’s better to be safe than sorry.”
That was until I learned all about inflation. And that’s when I realized that if I do not invest, then I’m setting myself up to be both safe AND sorry.
Safe AND Sorry
Year after year, price hikes occur. And no amount of protests and rallies and even government legislation can stop it.
Sure, those efforts can delay the process, but they can never prevent what’s inevitable. Prices of goods will go up, whether you like it or not.
I’ve been buying the same type of rice from the same rice vendor for many years. And according to my expense records, a kilo of rice back in 2009 was P35.00. Now assume that today is 2014, and rice today costs P45.00 per kilo.
If I had P350 five years ago, I could buy myself 10 kilos of rice. But if I chose to simply put that money in a savings account, then I’d have around P370 today.
Did I just earn P20 from interests? Yes.
Was putting my money in the savings account a safe decision? Yes.
But can I still buy 10 kilos of rice with that P370? No, not anymore.
Overcome your fear:
Your money may be safe in a savings account, but its value or purchasing power will decrease over time in there.
If you’re afraid to lose money in investments, then realize that you are technically, also losing money by not investing.
Money Is Simply, Just Money
Several weeks ago, a friend lost his wallet to a pickpocket while riding the MRT.
When I met him a couple of days after, he said that he had around P4,000 in it. But surprisingly, losing the money was not the most painful part of the experience.
He says that it was losing the wallet itself, which was a gift to him by his father before he died.
“I can work and earn back that P4,000 – but that wallet can never be replaced.”
People fear (and hate) losing money. But at the end of the day, considering all things, money is simply, just money. And more importantly, it can be earned back.
Your dreams and goals in life – these are things that cannot be easily replaced. So better make sure that you don’t lose them by failing to plan today for your future.
Overcome your fear:
Make it a habit to save money regularly. Your goal is to save at least six month’s worth of your expenses.
Doing so will create your emergency fund. But also, successfully achieving this goal will serve as motivation that even if you lose money in an investment, you can always just earn it back.
Let that emergency fund remind you that you have great money-saving skills. And fortunately, those are the very same skills anyone will ever need to create an investment fund.
The Big Picture
I fell in love with reading when I was in college. My dorm roommate at that time was a bookworm and I believe I got the habit from him.
However, I avoided buying books back then. I simply borrowed from him and other dormers because I was afraid that I might pick up and waste my money on a bad novel.
After graduation, borrowing books from my former dorm mates became inconvenient. Thus, I had no choice but to start my own collection.
One lesson I immediately learned – just because a book is a bestseller doesn’t mean that I will like it. In fact, there were several novels that I hated and even regret buying.
On the other hand, there were obscure novels I bought simply out of curiosity. A good number of these books ended up to be a great read for me.
Looking at the big picture, I now realize that my novel-picking skills will never be perfect. In fact, I still get to buy crappy novels today.
However, with each good book I discover, I am able to fine-tune my instincts and make better purchases later on.
But more importantly, I discovered that choosing those bad ones were not a total waste of money. Because at best, reading them has helped me expand my vocabulary.
Overcome your fear:
There’s no perfect formula for choosing the best and most profitable investments. And there will be times that you’ll make a bad decision and lose money.
But you have to look at the big picture. For each investment decision you make, the good ones will fine-tune your skills, while the bad ones will at best, help you expand your understanding of investments.
And lastly, the good news is that… when you make it a habit to invest regularly, you will eventually end up with more winners than losers.
That’s it! I sincerely hope that this article has given you helpful tips on how to overcome your fear of losing money when it comes to investing.
And if you have friends who are afraid to invest, make sure that you share this to them.