Frightened of investing? Don’t be!
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Investment doesn't have to be a frightening experience, says financial expert Peter Sharkey.
Dear reader, I need your help. Let me explain.
I was in London last week where I met the chief executive of a firm with whom I've dealt for some time.
Long story short: she asked me to give a talk to a few hundred people at a forthcoming event, an invitation to which I agreed, perhaps a little too readily, because when the subject matter was revealed, it put me on the back foot. The topic on which I must speak for 15-20 minutes is:
Why are people apprehensive about investing?
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Apprehension and uncertainty are perfectly normal human reactions to a wide variety of circumstances. Most people tend to become slightly nervous or worried at different times: before an exam, for instance, or prior to a job interview, or going on a date, or when planning to give a speech to a large audience.
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In this respect, investing is no different to most other anxiety-inducing situations. However, our apprehensiveness can be more acute because investment requires us to commit our hard-earned, often for a long time, to something we believe will do well, but there's no guarantee that it will.
Admittedly, we can relieve our anxiety when we're confident in the decisions we take, but this doesn't explain why people get apprehensive about investing in the first place.
Having pondered this on the train journey home and for most of the following day, I had a brainwave - ask this newspaper's readers about their experience. And so, dear reader, tell me what is your reaction to the following poser:
If we accept that investment is an inherently uncertain process, what, specifically, causes us to be apprehensive?
To get things moving, I've listed a handful of possible reasons below and would be extremely grateful if you could let me know whether some, all, or none apply. It doesn't matter what you may have been investing in: it could be property, shares, a small business (your own or someone else's), an ISA, a pension, or indeed anything on which you expected (or still expect) to achieve a return.
What might be called the 'conduit' for your investment may have tempered your apprehension and if so, please let me know. Did you feel more comfortable investing through a financial adviser, or via your bank, or did you prefer to be a 'DIY investor' and handle everything yourself?
Below you will find my list of possible causes of investment-related anxiety; feel free to add to them as they're far from definitive.
It can be enormously difficult to establish what level of investment risk is appropriate, not least because it's often determined by age: the older we get, the more risk-averse we become.
I can become apprenhensive when investing because:
1 - I don't have enough investment knowledge and am unsure about what areas to invest in. 2 - I'm never convinced I have enough information to base my investment upon and worry that I may have missed something.
3 - At heart, I don't believe I have enough money to invest.
4 - Investing is like playing roulette and this makes me uncertain.
5 - The prospect of losing money is a major concern.
6 - If I don't receive advice prior to making an investment, my sense of apprehension is more acute.
7 - Investment can be a worry because we have no idea what will happen in the future.
8 - My attitude to risk fluctuates according to the type of investment I'm undertaking
Yet we shouldn't ignore how we feel about taking risk because our ability to handle possible future losses, the most dreaded outcome, is an important factor in determining the level of investment risk we're prepared to take.
Apprehension, misgiving and unease are words usually reserved to preface an impending sense of foreboding although as individuals, we often apply them to investment. The question I must try to answer is why? With your help, we may get closer to finding that answer.
Please email your response to email@example.com , marking it for my attention. Thanks in advance; I'll let you know how this experiment in mass communication fares.
TAM Asset Management Ltd offer savers and investors the opportunity to save for their retirement in a variety of Investment ISA portfolios. For further details, please visit the MoneyMapp website.
THE WEEK IN NUMBERS
The combined depth of potholes reported across the UK last year reached 17.4 miles. That's 15 times deeper than the lowest point in the Grand Canyon. Councils spent £949 million repairing potholes in 2018-19.
There has been a marked fall in the number of students taking English Literature at A-level. According to data published by Ofqual, 8,995 fewer students sat A-level English Lit this year than in 2018 after GCSE English was 'toughened up' in an effort to raise standards.
The average cost of commuting by rail will rise by £87 next year. Analysis shows that the cost of an average season ticket will rise from this year's £2,980 to £3,067 in 2020. The highest increase will be a Virgin Trains season ticket between Birmingham and London, expected to be £10,902.
For more financial advice, check out Peter Sharkey's regular column, The Week In Numbers.