Tips for Overcoming Your Fear of Investing

The fear of investing is one that tends to increase in intensity during volatile times like these. However, many still have that fear of investing, even when the stock market isn't all that volatile. And it can be daunting to start investing. But there are some ways to overcome your fear of investing and get started.

Start small

There is no reason to take thousands and thousands of dollars and plunk them into a stock or a fund. That's a sure-fire way to increase your anxiety of investing. Instead, look around for a stock broker (I like online brokers) that will let you start an investment account for very little, and let you invest small amounts of money regularly. By using dollar cost averaging (also called fractional shares investing), you can risk smaller amounts of money in order to help you build confidence and get used to the idea of investing.

Choose index funds

Index funds can provide you with a "safer" way to invest. It is true: there is no truly risk-free investment. But you can limit your losses through index funds. These are mutual funds that invest in a variety of stocks on an index, allowing you instant diversification. And, while index funds don't have the same high returns as some individual growth stocks, they still have respectable returns that usually beat inflation. These can be a good way to help you get started with something solid in your investment portfolio.

Don't be a day trader

Some people, when they first start investing, go crazy making a lot of trades and compulsively following their investments. Consequently, their original fear of investing becomes heightened when they start seeing their earnings gobbled up by trading commissions and they worry about every blip in the market. If you have a fear of investing, it is better for you to develop a "buy and hold" investing strategy.

Read up on stocks and funds, and choose those that are solid, and are promising. Then buy what you can, or set up a direct withdrawal so that money is automatic put into an investment account that buys your choice. Every couple of months review your investment portfolio and consider changes then. Don't look every day, and don't trade too actively unless you are an expert.

It is possible to overcome your fear of investing and start making money.

Disclaimer: I am not an investment professional. This should not be construed as investment advice. All investment carries the risk of loss. Before investing, do your own research and/or consult with an investment professional.