Australians are a wary bunch and that’s not a bad thing.
As the Royal Commission into Banking has shown us, sometimes the so-called experts don’t have our best interests at heart.
I spend a lot of time talking about the right and wrong investment decisions so readers like you can avoid making costly blunders.
My point, however, is not to make people risk-averse or fearful, but to make them risk-aware.
They are two very different things.
How?
Well, risk-averse often means an unwillingness to take any risks whatsoever.
This the kind of mind-set that pulls out of a falling property or share market, even if the person has decades of time left in the market to make their losses back (and build on their wealth).
The risk-aware person, on the other hand, is open to the potential for investment, but treads carefully.
They do their research first — into both the investment and the person behind it — and they don’t let their natural human fear of losing money stop them from growing their wealth.
Fear, you see, is a great obstacle to wealth creation.
Here’s how to tell if it’s stopping you.
1. You have no wealth strategy
Rule number one of wealth creation: you need a strategy.
And this must extend beyond setting aside a portion of your wage each month — although that is a fantastic budgeting practice to adopt.
The truth is, you’ll never be wealthy while earning a wage.
You need to take advantage of long-term investing fundamentals, such as compound interest and capital growth.
- Also read:6 priceless investing lessons from influential billionaires
- Also read:Redefining Richness: Why Time Matters More Than Money
- Also read:Conquer Your Monsters: Busting the Top 10 Fears Holding You Back
- Also read:Booms, busts and investor psychology – why investors need to be aware of the psychology of investing
- Also read:10 BIG Benefits of setting up an SMSF or a Family SMSF
You have to take your money, invest it wisely, monitor it and watch it grow. Simply saving won’t do the trick.
2. You feel intimidated by money
Most of us learned about money from our parents.
They may not have sat down and taught us how to budget, but they passed on their feelings about money without even realising it.
If money was an issue growing up, you may now feel overwhelmed by the idea of money.
You may tend to avoid thinking about it — beyond the fact that it goes in and comes out — and you think that investment is for ‘money types’ i.e.: people who work in investment banks and pick stocks.
3. You`re waiting for a windfall
Fear can also turn up in the way some people wait passively to receive money.
You may reason that it’s too hard to get your hands on any yourself so it’s going to take a stroke of good fortune, like winning Lotto, to make you rich.
In reality, we have a much, much better chance of creating our own wealth — I’m talking significant wealth here — than winning the Lotto.
You just need to know how.
4. You don`t know how much money you have
Ask yourself how much money you have in the bank right now. What are your monthly outgoings? Can you tell me how much super you have and how it is invested?
I have a theory that the reason most people don’t know the answers to these questions isn’t because they are too busy to find out. It’s because they’re afraid of the answer.
They’re worried that the numbers will make them depressed and they won’t be able to do anything about it.
But that’s not true. As soon as your fears are faced, you can move to a wealth-creation mindset.
You’ll stop worrying about money and start enjoying making it.
Doesn’t that sound appealing?
