When you're scared to invest (Pt 2.)

Did you know the total superannuation value in Australia is over $4trillion? It is compulsory for an employer to contribute for their employees.

It is, in some ways, compulsory to be an investor as an Australian.

The total of NZ KiwiSaver funds is around $115billion, and it is voluntary to contribute.

But many of us are still sitting here asking ‘is it a good idea to invest?’.

I think this actually means ‘I am scared to invest because I don’t want to lose money’.

That makes more sense to me.

OR people don’t know what their goals are, so they don’t know if investing fits into their life.

Last week we looked at a list of reasons people haven’t started investing.

I think the key 3 were:

1. Fear/scared

2. Unsure how

3. Analysis paralysis

Let’s explore #1.

Fear/scared - I get it. Risk-averse people don’t want to see money go backwards. I used to be more like this until I learned that taking risk just felt unfamiliar, that I could always learn to make more money AND that you are already losing money as cash decreases in value due to its purchasing power decreasing due to inflation (we have all learned about this recently).

So, by not investing, in some way, you are already watching your money go backwards in terms of what it can buy.

Look I will be honest with you, I used to be scared to hold a girl's hand once upon a time. Learning to do that has been bloody expensive (jokes, it’s an investment) kidding, kidding, but I got over that fear.

I used to be scared of driving a car when I didn’t know how to. Then I learned how and discovered it was fine.

Then I moved to Auckland with this motorway thing. Holy sh!t that was scary.

Now bloody Elon is trying to get my car to drive for me.

Some of us just need to get closer to our fears and do the reps.

Can’t you see? It’s just because it’s money, and you’re not understanding your emotions about money that is getting in the way.

Why does money going backward scare you so much and hold so much power over you?

Where did this come from?

Have you had an emotional response to losing money at some stage in your life, and do you still hold onto this?

Because I bet you’ve done heaps of things you were once scared of.

• By not holding a girls hand, I am taking a risk to never find the upside of a long-term partner.

• By not driving, I am taking a risk of never opening my world to the freedom of mobility.

• By not driving on the motorway I am taking a risk of never getting to where I need to be on my terms.

• By not investing, you are making a decision and taking a risk.

It might be time to stop looking at all the short term discomfort & downside and start to think about the long term upside impact of investing.

Actions for these people:

• Ask yourself, will it really go to zero? Who do you know that ‘lost it all’ and how? Ask them how!

• Why not have a risk-free shot by selling something from around the house and investing it to learn the action taking piece? Could be $20. Then at least you’ve gone through the process and gotten closer to it.

• Have a think about how the Australian government made sense of making it compulsory for every Australian to become an investor. Understand that the NZ government even invests a portion of our tax dollars to build an investment pot to help cover the costs of superannuation.

Now, bizarre timing but as I write this I have JUST had a dividend email come though. It’s $3,431.21.

Epic, right?

A portion of those companies' profits are now mine. Of course, they get taxed too! There goes another $1,300+ in tax for me.

I have chosen to reinvest my profits back into the stock, so I get more shares instead of the cash. Compounding at play.

But get this, my original investment in this company has gone down from when I bought it. Does it suck? Well, I'd rather it was up. Am I worried? Not really.

It's a long-term investment.

Investing isn't all sunshine and rainbows and only ever making more and more money. It also isn't about posting endless screenshots on your social media of how good you are at investing.

You will get some lessons.

But, you don’t get dividends or to learn these lessons if you sit on the sidelines scared.

Lastly. Are you really going to teach your children not to take any risk in their life?

This stuff can be scary and fearful if you are unfamiliar with it. But it is not new, you may just be new to using it

Get closer to it and it’ll get closer to you.

A reminder - what you do with money needs to be tied back to your longer-term goals.

Be bold,

Luke

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