How to Boost Your Confidence in Investing Right Now

Why It Matters:
  • Women are saving their money more often than investing out of fear of losing it.1
  • Money saved in cash accounts may not keep up with inflation to meet retirement goals.
  • There are ways to get over your fear of investing and boost your confidence.

Kastle Waserman tkc.profilePicture Written by: Kastle Waserman | Transamerica
Oct. 30, 2019

5 Min readClock Icon

If fear of losing money from investing has you saving in cash accounts, you may be missing out on growth opportunities, especially if you’re a woman. When compared with men, women are much less likely to invest their savings.1

Investing is a way to potentially increase the amount of money you have by putting it into financial products that may increase in value, such as stocks, bonds, mutual funds, and property.2 Anyone who opts to keep money in savings only could miss out on potential wealth as a result.1

When women invest, they tend to be more conservative and take less risk.3 This can add to a list of challenges women face in saving for retirement that include lower incomes, the tendency to take time off for caregiving, and living longer lives. By letting money sit in savings earning little interest, women face a risk far greater in the long run, such as their money losing value to inflation or running out of money in retirement.

One way to take on your fear of investing is to work with a financial professional. It's their responsibility to introduce opportunities that are suitable to you to help you meet your long-term goals. One of the first things they’ll ask you is, “What is your risk tolerance?”

Risk tolerance is how well you would handle it if your investments suddenly lose value, such as a stock market drop. Would you panic and want to sell, or ignore the market swings and ride it out with your eye on your long-term goal? If you don’t know what kind of investor you are, you can take our quiz.

If you find you have a low risk tolerance, you would be considered a conservative investor who may pick investments that are considered low risk but also understand that growth potential may be less. Here are some suggestions on how you can face your fears and explore options that could provide a higher return:

Increase your financial literacy – We’re often fearful of things we don’t understand. Make a commitment to invest in yourself and enhance your knowledge to better understand how the stock market works. Pick a medium that works best for your personality and time availability. Like to read before bed? Grab a book. Got your headphones on during your commute? Try a podcast or audiobook. Like social interaction? Take a class at a community college.

Build in social responsibility – What if investing your money could make the world a better place? You may wish to learn about socially responsible investing (SRI), which means investing in companies that support your beliefs. Thinking beyond merely what’s good for you might be just the thing to get you more engaged with investing. Socially responsible investing is gaining in popularity, and there are a growing number of SRI choices available, from buying into individual companies to mutual funds and ETFs that group socially responsible companies together.

Catch bad habits – When you first start investing, you may be tempted to watch your portfolio very closely and react to every move up or down. However, this can lead to what is called “emotional investing,” which allows your fears or overconfidence to creep in and can cause you to do the opposite of investment best practices, such as buying low and selling high. Check out our recent article on behavioral finance and learn how to spot bad habits before they start.

Avoid the hype – While following news reports on the stock market may seem like a good way to learn, the truth is, a good bit of it is noise that can increase your fear of the market and affect your emotions. If you do watch it, be aware of sensationalism that can hype up a minor blip in the market for dramatic effect. This might make for good TV, but it’s not very good for solid investment advice. Limit your intake of all the chatter and follow a well-researched strategy.

Automate – Strategies such as dollar cost average, target-date setting, and diversifying can help simplify investing and set it up in a way that is low maintenance.

  • Dollar cost averaging allows you to consistently invest without having to watch the stock market. Simply work with a broker to set up a strategy to automatically invest a set amount of money into a financial product of your choice. The amount you invest stays the same, but the amount you buy may change depending on the stock price, so you buy more shares when the price is low and fewer shares when the price is high.
  • Target date setting is typically set up through a mutual fund and based on the date you think you’re going to retire. If you are more than 10-20 years from that date, you may invest aggressively for potential opportunity of growth. As you get closer to your targeted retirement date, it rebalances your investments to be more conservative and take less risk. The best part is, it does all the work for you.
  • Diversification is a way to help reduce risk by spreading your money across multiple investments. That way if one or some take a downturn, the others might be up to balance out the loss and your overall portfolio may stay on track for the growth you need.
  • Use your phone. If you do everything through apps, there are a number of them to help with investing too. Acorns automatically invests spare change from your purchases. Betterment automatically manages your investment portfolio with a “robot” robo-advisor and artificial intelligence to make adjustments as needed.

While using these strategies may simplify investing, they do not guarantee gain or prevent loss.

People used to save by hiding their money under a mattress. Other than setting aside some available cash for an emergency, putting your money only in savings is barely better than sleeping on it because it could lose value against inflation. By becoming more familiar with how to invest or by working with a financial advisor, you could put yourself in a better position to grow your money and meet your goals. And, you’ll probably sleep better knowing those dollars are hard at work on fulfilling your dreams.

Take our quiz to learn what kind of investor you are so you can get started today.

Things to Consider:

  • Women face challenges in retirement saving such as longevity and lower incomes.
  • Putting money to work through smart investing can help you pursue your financial goals.
  • Working with a financial professional can help you overcome investing fear.
 

1 “The Biggest Financial Mistake Women Make? Not Investing Enough,” USA Today, February 2019

2 “How Does Investing Work?” Sapling, May 2019

3 “Women and Investing: It’s a Style Thing,” Investopedia, June 2019


Neither Transamerica nor its agents or representatives may provide tax, investment or legal advice.  Anyone to whom this material is promoted, marketed, or recommended should consult with and rely on their own independent tax and legal advisors and financial professional regarding their particular situation and the concepts presented herein.

Acorns and Betterment are neither owned nor controlled by Transamerica or any affiliated company. Web addresses are provided as a courtesy and are neither endorsed nor reviewed by any of the Transamerica Companies. You should consider all source of reliable information available before making any financial decision.

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