6 steps to help you overcome your fear of investing

For many people, investing seems intimidating. Many Canadians aren’t currently investing because they lack knowledge or confidence in their ability to make investment decisions.

While it may seem that putting your money in a savings account is an easier option, it probably won’t grow much over time, and inflation and account fees can eat away at the value of your money. Investing, on the other hand, offers a way to grow your savings for some of life’s biggest milestones.

Investing can play a crucial part in securing your goals. It may provide the boost to your savings that allows you to fulfill dreams like buying a car, travelling, starting that dream project or even purchasing a home. Later in life, it could mean being able to support your children’s education or finance your retirement.

But taking that initial leap can probably feel overwhelming or provoke a lot of “what if” scenarios. If you find yourself starting to feel overwhelmed, you might start to feel more comfortable if you consider these few simple tips when starting out.

  1. Start small. Determine the amount you feel comfortable investing and choose a goal that is appropriate to where you are right now – and where you want to be. You can revise your plan as your investment goals change over time.
  2. Educate yourself on how different investment options work and how they’re likely to behave. If you don’t understand an investment, don’t buy it.
  3. Set expectations. Consider your risk tolerance, and understand the risks and rewards associated with an investment.
  4. Pay attention, but don’t get obsessed. It’s likely your investment won’t change much from day to day or even month to month. But even if it does…
  5. Try not to let volatility scare you. It’s normal for market cycles to fluctuate and there is no one-size-fits-all approach. Individual time horizons differ and may not align with market cycles, but it’s important to remember that time in the market is more important than timing the market.  
  6. Avoid moving your money around every time there’s a change in the market. This makes it more likely you will end up buying when prices are high and selling when your investment is worth less. Remember that any loss is only on paper – until you sell.

Once you get started, you’ll have a better sense of yourself as an investor. How much risk are you willing to take? Are you interested in specific sectors, geographic regions or mandates? How interested are you in the process, and how much time do you want to spend on it?

As you learn and become more confident, you may want to invest more or try different types of investments. But simple is a good place to start. And it’s okay if you stay there. Just making the decision to start investing can help put you ahead.

Learn more about the basics of investing, and get tips on how you can get started, at Investing 101, or try our Investment growth calculator to see how you can reach your financial goals.