Books, Psychology

Asset Mix I: Fear of Investing

Thinking about how our Net Worth should be split up, I came upon various suggestions as to the Asset Mix. Provided the world remains as it is now, one should have a balanced mix of Stocks, Bonds, Real Estate and Cash. All elements are optional, of course, but everyone agrees that 100% should not be kept in one basket.

Provided the world remains as it is now…
I have a fear that one fine day all of it can just go to hell. The market, the governments. I’m also afraid of WWIII. This – hopefully irrational – fear is preventing me from investing much into stock market. Of course, Reason tells me if there ever is a World War, all money will lose its value anyway, so why worry about it? The smart thing would be to live assuming that it’s all going to be alright.

I don’t know where this fear comes from. I’m 27 years old, I never had to live through a Depression or a War (not in my country, anyway). My Grand-Parents did, maybe I paid too much attention to their stories. I think I have the mindset of the survivors: Only hard cash is real to me. This is a huge mental block I have to break because, it’s actually costing us money: while it idly sits in the bank, it’s losing value.

To start investing, I mean really investing, that’s something I have to fight.

The accessibility of discount brokerages and ability to trade as easily as checking email are perfect circumstances for becoming an investment gambler. Even more reason to approach this carefully. Play money (that $3,500 I invested just for fun) was fine, and I think I made a few good choices. That’s encouraging, but to invest significant amounts there has to be some sort of rhyme and reason – a philosophy – behind it all.

I’m reading some good books on investing right now. By the way, can you tell good investment books from the bad? (Question from “The Only Investment Guide You’ll Ever Need”. I’m still reading my library copy but it’s a fantastic book that I’m going to buy). I’ll tread lightly at first.