Sounds good, right? Well, I have a skeleton in my closet: I am afraid of investing. And 2013 is my year to conquer it (or at least subdue it a little).
At first glance, you may not believe me. After all, I started contributing to a 401(k) when I was 21, getting the maximum employer match. Since then, I've always contributed enough to get the employer match and sometimes more. In addition to my company-sponsored retirement accounts, I have my own personal Roth IRA that I contribute a small amount to each month.
Why then this fear of investing?Compounded fears Fear causes all sorts of dismal things, not the least of which may be missing out on compound interest and decreasing the timeframe in which to invest. Do we share any fears of investing?
- Losing money. I am not afraid of losing money…now. I mean, I would rather not, but I can overlook a short-term loss for a long-term gain. But plenty of people, like my husband, are. Instead of embracing some risk, some people want to leave their money is very safe accounts - accounts that don't keep up with inflation, so the money is lost after all.
- I can't save enough money, so why try at all? No one wants to spend their retirement worrying about money. Still, the long-term goal, the amount of money required, and the current financial responsibilities of today make it difficult to get past this fear.
- Making the wrong decision. This is my greatest fear: What if I decide to invest in this and only get an 8% return on my money when I could have invested in that for a 10% return? A 2% difference over 40 years is HUGE. How would that affect my children and grandchildren?
- It's too hard/I'm not smart enough. Oh, yeah. This, too. I prefer wading through ways to earn more money or cutting expenses to deciphering methods of investing. Real estate? Stocks? Gold? Mutual funds? Index funds? Ugh. And what about all those terms? Dividends, small-cap, growth vs. income, mutual funds, and ETFs. It's enough to make me go make homemade laundry detergent and forget this investing stuff. But that Robert Brokamp is one smart dude. I hope you're reading his stuff. He's smart and funny.