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With DIY investing blowing up on social media, it’s easy to fall into the trap of thinking that everyone around you has an established portfolio. However, the top comment on any financial influencer’s video on TikTok or YouTube usually echoes one sentiment: I want to invest, but I’m scared.
People who feel this way are more common than you might think. According to a 2024 World Economic Forum survey, 40% of individuals made the decision not to invest because they feared losing money.
Key Takeaways
- Fear of investing is common. According to a 2024 World Economic Forum survey, 40% of people surveyed held off on investing in the market due to fear of losing money.
- But waiting to invest can often cost people more money than they save by trying to time the market and invest at the right moment.
- There are plenty of low-risk, easy investments that people can start with, such as exchange-traded funds (ETFs) and mutual funds.
Why Your Fear of Losing Money Is Costing You
A study by Charles Schwab found that the costs of waiting to invest often outweigh the benefits of perfect market timing. That’s because if you wait too long and get it wrong, you could be losing out on a bunch of money from compound interest.
“Avoiding investing feels like protection, but it’s expensive. Inflation quietly eats away at savings, growth gets delayed, and you end up working harder just to maintain, instead of using your money to build more freedom,” said Cindy Kumar, the chief executive officer of Elevated Accounting. “The fear is real. But so is the cost of staying frozen.”
So, if you’re an anxious investor, where should you begin?
Investment Options That Won’t Keep You Up at Night
Asher Rogovy, chief investment officer of the advisory firm Magnifina, recommends starting with index funds.
“They can hold hundreds of stocks. With so many stocks, investors can earn a typical return without worrying about a catastrophic loss from a single bad company,” he said.
Robert R. Johnson, a professor of finance at Creighton University, agrees that a diversified stock portfolio is a key way to build wealth.
“Counterintuitively, the biggest mistake many people make in investing is not taking enough risk,” he said. “There is an old Wall Street adage that states: You can sleep well or eat well. You will sleep well if you commit funds to low-risk investments like money market funds or Treasury bills, but your investments will not grow substantially and may even have trouble keeping pace with inflation. You will eat well by consistently investing in stocks.”
Johnson also recommends mutual funds. “Investing in diversified mutual funds or ETFs is a wonderful strategy for just about any investor. Mutual funds are a terrific choice for investors who have limited capital to work with and cannot afford to purchase a broad range of securities to achieve adequate diversification,” he said.
How to Build Confidence
Sometimes, though, investors’ anxieties don’t stem from what they invest in, but rather how. It can be nerve-wracking to fold large sums of money into an investment account all at once. That’s why experts recommend starting small.
“If you’re nervous, don’t try to deploy everything at once. Spread your investments out over 12 or even 24 months. That gradual approach builds muscle memory and makes it easier to stay the course,” said Stephan Shipe, a finance professor at Wake Forest University and founder of Scholar Financial Advising.
“One of the best ways to overcome the fear of investing is to use dollar-cost averaging. That means committing to invest a fixed amount on a set schedule—say, the first Monday of every month—no matter what the market is doing,” Shipe said. “Even if it’s crashing that day, you stick to the plan. No excuses.”
He said this is helpful because the average market return is positive over time. “Time in the market matters more than timing the market,” Shipe said. “Once people start investing regularly and see that their balance is growing, that fear starts to go away.”
Rogovy agrees, adding that this is a particularly great time to start small. “Now that many brokerages offer $0 commissions and fractional shares, small investors can build professional-grade portfolios without significant costs,” Rogovy said. “It’s easier than ever for anyone to build a diversified stock portfolio.”
The Bottom Line
At the end of the day, if your anxiety is keeping you from making smart financial decisions for your future—such as investing in index funds and mutual funds—it may be time to consult with a financial therapist or other mental health professional. While investing can be scary, it is a necessary part of planning for a financially stable future.
