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If You Can't "Unfear" the Stock Market, Here's How to Work Around Your Worries

By Maurie Backman - Mar 21, 2021 at 6:36AM

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Maybe investing just plain makes you nervous. If you can't change your mindset, here's how to forge forward in spite of it.

Does the thought of investing your money send you into an all-out panic? Don't worry -- you're not alone.

I used to be terrified to invest myself, until I eventually managed to train my brain to be less fearful. And while getting over our fears isn't easy, the reality is that if you let your concerns stop you from investing, you might put yourself in a position where you fall short on financial goals, whether they relate to retirement or other milestones. That's a bad thing. As such, it pays to do what you can to work around your fears, and here are three tips that'll help you along.

Man sitting on bed putting hand over face

Image source: Getty Images.

1. Don't check your portfolio balance every day

It's not unusual for the stock market to swing wildly from one day to the next. But it can be extremely disconcerting to log onto your brokerage account, check out your balance, and see a number that's several thousand dollars lower than it was just a day before. The solution? Don't do that to yourself. There's absolutely no reason to be checking your portfolio value daily -- namely, because you shouldn't be buying and selling stocks on a daily basis.

Instead, aim to do a quarterly check-in. This doesn't mean your portfolio won't lose value in three-month increments at times. But this way, at least you're not sure torturing yourself on a regular basis and putting yourself in a position where you might make poor, rash decisions due to fear alone.

2. Have a solid emergency fund

One of the things that helps me stay calm about investing is knowing that I don't need my brokerage account money in a pinch. Instead, I have a solid emergency fund in the bank I can fall back on in case I find myself dealing with an unplanned bill my paycheck can't cover.

A good way to ease your own investing concerns is to set yourself up with a similar cushion. As a general rule, it's wise to aim for three to six months' worth of living expenses in the bank. That buys you some protection if you're laid off or your car decides it's no longer willing to start. And it also means there won't be a need to liquidate your investments -- and risk losses -- in those situations.

3. Diversify

Having a diverse mix of stocks can help you avoid serious losses in your portfolio. What exactly does that mean? Owning at least a dozen stocks across a range of market sectors is smart so that you might, for example, buy a few tech stocks, a few energy stocks, and a few healthcare stocks.

Another option is to diversify with index funds or exchange-traded funds (ETFs), both of which are designed to match the performance of different market indexes. When you invest in index funds or ETFs, you effectively scoop up a bunch of stocks with a single buy, and you get the broader market exposure that can serve as a means of protection during periods of volatility.

It would be easy enough for me to sit here and tell you that there's no need to be scared of the stock market, but I also know that many people's brains don't work that way. I hate flying, for example, and while the logical part of my brain knows I shouldn't be scared to get on an airplane, I still break out into a sweat every time I do. Similarly, you can't just snap your fingers and eliminate your investing fears in a flash. What you can do, however, is adopt a strategy that allows you to work around them so you can reap the many benefits of investing.

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