Does Investing Stress You Out? Here's Why

According to the Bible, saving for the future is wise. Long-term saving goals often include the need to invest.

Does investing (or the thought of it) stress you out? You are not alone. Investing, despite its potential for financial growth and security, often evokes stress and anxiety among individuals. Whether you're a novice or an experienced investor, the reasons behind this stress are complex and can be rooted in psychological and practical factors.

Let’s look at some of the common reasons people get stressed out when it comes to investing:

1. Fear of loss.

One of the key reasons investing can be stressful is the fear of losing money. This fear is a natural response, usually stemming from our desire to protect our resources. The unpredictability of financial markets can heighten this fear, particularly during times of economic turbulence or market downturns. It's important to remember that losses are felt more strongly than gains, a phenomenon known as loss aversion. Overcoming this fear involves recognizing that investing carries risks and adopting a long-term perspective.

2. Lack of Knowledge and understanding.

Investing can seem complex. It involves a range of financial tools, investment options, and market dynamics. Many people get stressed because they feel they lack adequate knowledge and understanding of these concepts. Without a solid grasp of investment principles, individuals may feel unsure about making informed decisions, leading to hesitation and anxiety. Fortunately, investing does not have to be overly complicated. Educating oneself through reputable sources, seeking advice from financial experts, and starting with simple investment strategies can help reduce stress.

3. Emotional biases.

As you listen to or read about someone’s investment success story, does it make you want to take the same risk they did, even if it is irrational? Emotions play a significant role in investment decisions. Behavioral biases such as overconfidence, herd mentality, and anchoring can cloud judgment and lead to irrational investment choices. For instance, the fear of missing out (FOMO) can drive individuals to make impulsive investment decisions based on popular trends rather than sound investing strategies. Recognizing and managing these biases through disciplined investment strategies and maintaining a diversified portfolio can reduce emotional stress.

4. Uncertainty about the future.

Is now the right time to invest? Investing involves predicting future outcomes based on current information. However, we can never be fully confident about what will happen in the future. The uncertainty of how markets will perform, geopolitical events, and economic trends can create anxiety for investors. While it's impossible to predict the future with certainty, focusing on long-term financial goals, diversifying investments, and maintaining a balanced portfolio can help manage uncertainty.

5. Pressure to get out-of-the-ordinary returns.

When it comes to investing, there can be pressure to achieve abnormally high returns on investments, especially if you consume large amounts of social media on the topic. This pressure can lead to stress and a tendency to take excessive risks to meet unrealistic expectations. It's important to set realistic investment goals aligned with your risk tolerance and financial situation. Remembering that investing is a journey, not a sprint, can alleviate the pressure to perform and allow for steady, sustainable growth. Be the tortoise, not the hare.

So, what can you do about it?

To reduce the stress associated with investing, consider the following strategies:

Educate yourself. Take the time to learn about different investment options and financial markets.

Set clear goals. Define your investment objectives, time horizon, and risk tolerance. This clarity can guide your investment decisions and reduce uncertainty.

Diversify your portfolio. Spread your investments across various asset classes (stocks, bonds, etc.) to reduce risk and enhance potential returns. You can use index funds, ETFs, and mutual funds to help you diversify your portfolio.

Stay calm during market fluctuations. Market ups and downs happen. Avoid making impulsive decisions based on short-term market movements. Focus on long-term trends and your investment strategy.

Seek professional advice. According to the Christian Financial Health Report, Christians who felt their retirement savings were on track were most likely to say they received trustworthy financial guidance from a financial professional. So, consider consulting with a Certified Kingdom Advisor to develop a personalized investment plan tailored to your goals and circumstances.

By understanding the reasons behind investment stress and implementing practical strategies to manage it, you can approach investing with greater confidence and peace of mind.