Whether we are willing to admit it or not, we all have fears. Depending on our background and personality we all have a unique set of circumstances that we avoid out of fear. Fear can be rational or irrational and it may be used for good or evil. It can hold us back, and in the worst cases people can use our fears to manipulate us.

I have come to believe that learning to use our fear constructively can be one of the most powerful life skills we can cultivate. This proves to be very accurate when it comes to people and their finances.

Financial advisors consistently encounter people that worry about things like whether they will have enough for their later years or if they are doing the right things to get them there. Then every once in a while we encounter the irrational fears, the ones that hold people back or encourage them to avoid their situation instead of facing it head on. It’s easy to let your fears get in the way to the point where your finances control you, instead of  having a plan to control your finances.

The power of fear

One of my most irrational fears that I have managed to marginally control is my fear of anyone dressed in a costume that covers their face. My family and friends still harass me about the times I would ruin fun events like a clown coming to class with my dramatics. There was also the time I hid under the table sobbing at a friend’s birthday party while the A&W root bear tried to coax me out, not realizing he was making it worse.

I remember that fear clearly, and IT WAS REAL. To this day, pranks towards me that exploit this irrational behavior are not even mildly entertaining to me, while it provides plenty laughs for everyone else. I still feel myself tense up and take the long way around if I see a mascot trolling for hugs at the fair or a sports event.

Now that I’ve embarrassed myself and given public ammunition to my friends for years to come, we can all acknowledge that I know what it feels like to let your irrational fear ruin an experience. Does this discomfort I still feel around masked individuals mean I don’t leave my house on Halloween or that I need to avoid parades for the rest of my life? Absolutely not. I’m not willing to miss out on experiences just because of it.

I’d challenge you to consider…. Are you missing out on financial opportunities or progress because of fear? Have you written off investments because you are afraid of fees or losing your money? Have you let a friend or family member’s bad experience scare you away from developing a financial plan? Are you hiding under the table hoping it’ll all work out if you just close your eyes long enough?

This is common, and we see it in people every day. I’m here to tell you that it’s time to put your big kid pants on and use your fear constructively. I’d like to address some very common fears our clients face and what you can do about them if you relate.

I’m afraid to face my financial situation

There is a lingering feeling that develops when we don’t do the things we know we should be doing for long enough. Eventually you develop a feeling of apathy and you start to believe your situation might just be too far gone. That you missed the train and there’s no alternate route of getting where you intended to go.

This feeling is very common, and it comes from simply not knowing where you are at. Once you remove your fear from the situation and lay it all out on the table, there is almost always a way. Choosing the path of least resistance now has a way of catching up with you in the long run. You might be surprised to find out that there may just be a few little things you can change that will make a huge difference to your financial future over time.

I’m afraid that the fees will make it pointless to invest my money

This is a really common fear, and if it’s true you probably have a poor investment. The simple remedy to this is to ask your advisor what your fees are and compare that to your returns. You may need to switch things up or have a conversation if you temporarily have lower returns because of market conditions that will recover and be profitable in the long run. This process will most likely give you a better understanding of the numbers and ease your concerns.

Remember that the lowest fees may not actually be the best choice, you want responsible fees and quality investments. If a portfolio manager does a fantastic job at managing a fund, a bit of a higher fee will come out in the wash if you are making returns that beat their lower cost counterpart.

The irrational way to address this situation is to stop investing completely or never start. Statistically it is not actually fees or returns of investments that determine financial planning success, it’s actually doing it that makes the difference! The people who consistently make investing significant amounts (10-15%) of their income on a long-term basis are the ones that are most likely to win with investing.

I’m afraid I won’t understand what I’m signing up for

I get it. It feels like professionals are speaking another language sometimes! The truth is that they kind of are. Every industry has its lingo and acronyms. What makes a great advisor is the ability to communicate effectively and help you understand the concepts being discussed.

It’s our job as advisors to know the industry and language. You should be able to understand us without having to study the terms. DO NOT be afraid to ask question and make an advisor repeat themselves or explain something differently as many times as needed. Finding an advisor that is compatible communication wise with you is worth shopping for.

I’m afraid I will lose my money

This is a valid fear to have if you are playing around with investing large amounts into start-up companies and into single securities. Big promises and no proof in the numbers are a gamble. Investing in a fund or portfolio that is properly managed where diversity is built in can provide stable long-term growth. Again, make sure you ask questions to understand what you are investing in.

Another thing to keep in mind is that people often give into fear when the value of their portfolio goes down. The way to think about this is the same way you would think about any real estate you own. The value of your home may go up or down, but selling your property is what locks in the loss or gain. This is why consistent, long-term investing is the way to go.

I’m afraid to say “no”

So many people in our culture go about avoiding things instead of communicating and having the confidence to tell someone no. Especially in the financial industry, people often feel like if they engage with someone then they are obligated in some way, and that is simply not true.

Do yourself a favor, find out what you need to know and make a call. Wandering around in life with indecision because you are afraid to say no is a recipe for mediocrity.

Our fears can be used constructively or they can shut us down completely. Communication and behavior are the biggest factors in whether or not you are organized and end up where you want to go financially. You can either be the one asking intelligent questions or you can be the kid hiding under the table missing the party. Choose wisely.

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