More people are afraid of investing in the stock market than they are of dying

Are you afraid of spiders? Clowns? Or maybe your fear is something you encounter regularly, like public speaking or using the elevator?

Are you afraid of spiders? Clowns? Or maybe your fear is something you encounter regularly, like public speaking or using the elevator?

Are you afraid of spiders? Clowns? Or maybe your fear is something you encounter regularly, like public speaking or using the elevator? Or perhaps, like the majority of respondents in a recent study, these frightening things pale in comparison to something that has the power to make or break a person’s fortune: the stock market.

According to a survey by Harris Interactive on behalf of Nationwide Financial, more people are afraid of investing in the stock market than they are of dying. Fifty-seven percent of survey respondents said they are afraid of dying, while 62 percent are afraid of investing in the market and 83 percent of people are afraid there will be another financial crisis. These fears are translating into fewer people seeking the help of a financial adviser and putting their money to work in the market.

Despite openly fearing the markets, the study found that only 43 percent of Generation X and 51 percent of Millennials are using a financial adviser to help manage their money. Dr. Michael Klein, a psychologist with a private practice in Manhattan, says that this behavior is a typical of people with fear or anxiety.

“The absolute signature response to anxiety is avoidance. In this case, the avoidance you see is people staying on the sidelines and not contributing to the market,” Klein says, noting that avoiding the markets because of investing anxiety is no different than people who fear spiders or elevators avoiding spiders and elevators.

Klein explains that the market crash of 2008 was a traumatic event for most people, and as such, that memory is overriding the brain’s ability to objectively analyze the market and see that, as a whole, investing can be a good thing.

“What we know about trauma is the availability of the memory of 2008 is very very fresh. It trumps [the idea] that over the past 100 years overall, overwhelmingly the historical evidence shows that investing in the stock market over the long run is a good idea,” he explains. “Right now what you’re seeing is the fear memory trumping the slightly longer memory that says historically, you’ll come out ahead.”

While he’s never treated a client with an investing phobia, Klein says overcoming investing anxiety is similar to overcoming any other anxiety: gaining slow exposure to the feared thing, a little at a time.

“Rather than stay on the sidelines you dip your toe in,” he says. “A person could invest a portion of money that they’re comfortable with. You have to expose yourself to some of the fear and allow it to extinguish the past over time. You do it in steps that feel manageable.”

Seeking the help of a financial adviser who seems genuinely trustworthy can be another way to overcome a fear of investing. That person can hold your hand and reassure you when you’re nervous about something you’ve read in the news or seen in your accounts. It’s like having a partner for your investments instead of going at it alone.

Past performance is no guarantee of future results.

Stocks offer long-term growth potential, but may fluctuate more and provide less current income than other investments. An investment in the stock market should be made with an understanding of the risks associated with common stocks, including market fluctuations.

Jean Chatzky

About Jean Chatzky

Jean Chatzky, the financial editor for NBC’s TODAY show, is an award-winning personal finance journalist, AARP’s personal finance ambassador, and a contributing editor for Fortune magazine. Jean is a best-selling author; her eighth and most recent book is Money Rules: The Simple Path to Lifelong Security. She believes knowing how to manage our money is one of the most important life skills for people at every age and has made it her mission to help simplify money matters, increasing financial literacy both now and for the future. In April 2013 Jean launched Jean Chatzky's Money School , a series of college-style, interactive online personal finance courses that give men and women across the country the opportunity to learn from and interact directly with her. Jean lives with her family in Westchester County, New York.
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One Response to More people are afraid of investing in the stock market than they are of dying

  1. mike says:

    Even a respected paid advice service (e.g. Motley Fool’s Stock Advisor) will give people the baseline knowledge to invest confidently. People need to realize that stuffing money under the mattress won’t get them to retirement anymore. I’m most anxious when my money is on the sidelines…it means it’s not working for me. I sometimes go more cash-heavy when the market gets rough, but only because I’m looking for deals.

    People need to realize that if the economy took a truly catastrophic dive, none of this matters much anyway. People are fearing the wrong and least likely scenario, and allowing it to put them in a very real and much more probable bad retirement situation.

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