“The only thing we have to fear is fear itself”–Franklin Roosevelt.
Fear is a very powerful emotion that causes people to behave positively or negatively. There are some who allow fear to paralyze them. And there are also some who use fear to motivate them to move forward.
When it comes to handling money, fear is a major factor that affects the way people behave toward their decision.
Fear of losing out
When it comes to money, fear is undoubtedly a hindrance to investing.
According to the Bangko Sentral ng Pilipinas, only 3 percent of Filipino adults invest in bonds, funds and stocks. Many prefer to put their trust in guaranteed instruments, such as banks, Social Security System or Government Service Insurance System and the Home Development Mutual, or Pag-ibig, Fund.
They are afraid to invest in other financial instruments for fear that their investment will lose value due to the volatility of the market. They also suffer from analysis paralysis, which cause them not to invest at all.
Just like the American people during the Great Depression, their fear will just make matters worse later in their future. Even if there is a desire to grow their money, their fear is stronger than their dream and the result will be no action.
A perfect example is a person who inquires about investments and having all the information he wanted, decides not to push through out of fear of the market going down when he has really no basis for his fear.
Fear of missing out
Commonly known by the acronym FOMO, the “fear of missing out” as defined by Wikipedia is a “pervasive apprehension that others might be having rewarding experiences from which one is absent.”
Especially in money matters, this kind of fear may be good as it will prompt a person to act than to be passive.
However, the person, out of haste and greed, risks committing an error by having a herd mentality and join the bandwagon without studying the investment offered. This is primarily the reason why scams proliferate.
In the past, many people were duped by scams that offer was 5-percent interest per month. People invested because they were told that many celebrities also invested. They forgot that those people were also human beings who are prone to committing mistake due to greed.
The saying “haste makes waste” in this situation holds true. By hurrying to invest without researching, the probability of losing the whole investment is higher and will be more painful than letting the opportunity pass by due to the fear of loss.
What to do
There is saying that it is not about knowing what to do, it’s doing what you know.
It is important that you have good information but equally essential is knowing what you do with what you know. Since fear is the enemy of will, you have to make will more powerful than your fear.
With regards to personal finance, the only antidote to fear is to be financially literate. By learning the basics of personal finance, we have the knowledge on the different ways to invest our money intelligently.
We will be able to evaluate offers and make sound decision based on logic. Emotions will be never be a part of the equation. We can act the way Superman did to protect himself and win. Even the late Bruce Lee said: “Knowing is not enough, we must apply. Willing is not enough, we must do.”
Are you willing to overcome your fear?
Edmund Lao is registered financial planner of RFP Philippines. To learn more about personal-financial planning, attend the 75th RFP program this April 2018.
To inquire, e-mail info@rfp.ph or text <name><e-mail> <RFP> at 0917-9689774.