Home > Financial Help > How To Overcome Fear When Investing

The following article was written by John Gowan the principal financial consultant at Financial Legacy Builders. an asset management and financial consulting firm that specializes in helping people eliminate debt, invest for future goals, and increase their charitable giving.

Conquering Fear When Investing

“The Worship of Safety Emasculates Greatness” – Max Lucado, Fearless

It is often said that the stock market is driven by two simple human emotions: fear and greed. Most of us understand the danger of allowing greed to drive our investment decisions, but fear often plays a much more subtle, underlying role in hijacking our investment portfolios. Studies have shown that individual investors are often really bad at timing the market. People invest in droves when the market is near a peak and then flee out of fear when the market is close to its bottom. Fear also keeps people on the sidelines even when they know they should act. Does fear of the next crash keep you from investing in the stock market. Are you hesitant to buy that real estate investment property you’ve been eyeing out of fear of making a mistake? If so, you’re not alone, but just remember that fear is rarely a good decision maker.

To gain more understanding of how fear can hold us back from our full potential, we turn to scripture. It turns out that money and fear are two of the most popular topics found in the Bible. There are over 800 bible verses about of money. and the topic of fear is discussed on 365 different occasions. In his book Fearless, Max Lucado describes how much Jesus emphasizes the subject of fear:

His most common command emerges from the “fear not” genre. The Gospels list some 125 Christ-issued imperatives. Of these, 21 urge us to “not be afraid” or “not fear” or “have courage” or “take heart” or “be of good cheer.” The second most common command, to love God and neighbor, appears on only eight occasions. If quantity is any indicator, Jesus takes our fears seriously. The one statement he made more than any other was this: don’t be afraid.

There are also scripture versus that merge the two topics of money and fear. Matthew 25:24-30 is one good example:

The servant given one thousand said, Master, I know you have high standards and hate careless ways, that you demand the best and make no allowances for error. I was afraid I might disappoint you, so I found a good hiding place and secured your money. Here it is, safe and sound down to the last cent. The master was furious. Thats a terrible way to live! Its criminal to live cautiously like that! If you knew I was after the best, why did you do less than the least? The least you could have done would have been to invest the sum with the bankers, where at least I would have gotten a little interest. Take the thousand and give it to the one who risked the most. And get rid of this play-it-safe who wont go out on a limb. Throw him out into utter darkness. (The Message)

So how do you overcome fear?

For starters, you can take your fears to God and pray about them. Simply acknowledging your fear and allowing God to take control of the situation often has an instant calming effect that is typically followed by much improved clarity regarding the situation. You can also discuss the decision you’re facing with a close friend or advisor. When it comes to investing, sometimes just receiving a second opinion from a trusted financial advisor can be enough to lead you to take action. Performing research and getting all of the facts can also help suppress fear.

Historical data shows that over 95% of the rolling ten-year periods of the stock market’s history have been profitable (as measured by the S&P 500 total returns since 1950). Armed with this type of knowledge and information, we tend to be much less likely to make a decision that is driven by fear. Conquering fear also requires action and positive thinking. Don’t sit around and worry about what may or may not come to pass. If watching the daily gyrations of the stock market starts to invoke fear in you, then turn off CNBC, avoid the financial headlines, and make a promise to yourself to only check your portfolio balances at predetermined intervals, such as once per quarter. This will help keep your emotions in check and may have the added bonus of freeing up some of your time for more important matters.

It is also much easier to be a courageous investor when we are able to keep our finances in proper perspective. We are not the true owners of our bank accounts or investment portfolios. The Bible clearly states that God owns it all we are merely stewards. We can invest without fear when we realize that the money we possess has no eternal value and that God is in control of every facet of our lives. Are you concerned about losing what you own? If so, then consider the fact that you entered this world with nothing and that one day you will also exit this world with nothing.

Finally, being courageous in our financial decisions does not mean that we should throw caution to the wind and not act prudently. It also doesn’t mean that we should avoid planning for the future or trying to mitigate risk. If we’re not careful, we can easily get caught up in another trap which is to dive head first into an investment without considering any of the risks or consulting with God in advance. Trusting in God does not mean that we should take our money to Vegas hoping that He will miraculously shower us with riches. We shouldn’t try to “put God to the test,” and sometimes when fear is absent, greed quickly moves in. It is very important to avoid these two extremes and make sure that we’re doing our due diligence while we rely on the Lord to take care of the things that are outside of our control. Quite simply, God wants us to do our best and then He will take care of the rest.

In and of itself, fear is not a sin and serves a healthy function. However, when fear leads us to take a path different than the one God intended for us, we have allowed our desire for safety to go too far. Trust God with your finances by focusing on Him, allowing Him to guide your decisions, and giving Him control of every facet of your money. By doing so, you will liberate your life (and your finances) from the grips of fear and will then be able to fulfill your God-given destiny.