Tuesday, January 12, 2010

Fear and the Investor: Types of Fear 1 of 4

We are born with only 2 fears in our inherent make up; the fear of falling and the fear of loud noises. Their purpose is to keep you alive by alerting you to danger. All other fears are learned. Fear is often connected to pain e.g. some fear heights because if they fall, they may suffer severe injury or even die upon landing.

Ok, so you're not about to get your leg torn off by a rouge shark and bleed to death on a nameless beach in the tropics. But there are a lot of scary things going on in the world today; not surprisingly, there always have been and always will be. Now, let's break down a few of these fears in relation to investing.

3:AM-Keep-You-Up-at-Night-Pain-in-the Gut-Fears:

  • Losing all your money -Becoming destitute or at least losing what you've built up
  • having enough money to invest- Scarcity, afraid that you can't get started
  • Not being able to enjoy retirement -Having to eat cat food not only for breakfast, but also for dinner
  • health costs -Can't afford to go to the doctor
  • Stock or Real Estate crash -Have all your savings wiped away
  • Losing all your money -Being taken advantage of by a smooth criminal
  • Inflation -Rising costs and taxes are pretty much inevitable

  • Fear of not knowing enough -Afraid you'll make the 'wrong' choice so you do nothing
  • Fear of taking action -Scared if you do, scared if you don't
  • Fear of failure- your friends, family and maybe even you will see yourself as a loser if you don't make it
  • Fear of the market- the economy is awful right now, how can I ever expect to make a profit? A.K.A 'I don't know the market well enough', 'I'll buy at the bottom'

  • Fear of succeeding- Fear that you will accomplish all that you set out to, but that you still won't be happy, content, or satisfied once you reach your goal
  • Fear of losing what you created- your accomplishments can self-destruct at anytime.

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