I was asked the other day by one of my investing course community members how I settled on picking funds for my investing portfolio. She was worried about picking the wrong thing and losing all her money!
I can totally understand where this question is coming from. I felt like this too when I first got going, although I started investing with no money at all, so I didn’t really feel like I had anything to lose! It still doesn’t mean that I wasn’t worried about picking something that would make me no money, or that there would be something “better” and I had missed it.
How Do I Pick?
We had a discussion about how it doesn’t really matter what she picked in the end, as long as she followed the rules in my course and picked low cost, passive funds like index trackers and exchange traded funds. Beyond that, it comes down to what is in the fund, and what you fancy investing in.
Her new journey got me thinking back to when I was first choosing, and I tried to remember how else I had chosen.
Prepare to be underwhelmed:
- I didn’t obsessively read financial publications to base my choices on (but I did read the key facts sheets and some specific websites to understand my choices better);
- I didn’t watch the business news on TV;
- I had no idea which companies were up and coming, and which were on their way out;
- I ignored politics;
- To put it simply, if the fund didn’t fit into my portfolio structure, or follow my rules, then it didn’t come in.
Once I have decided to put something in to my portfolio, it stays in for at least a year so I can see how it does, but in all honesty, I’ll probably leave it for longer anyway because if I have chosen based on my criteria, then I know I’ve done the right thing. I just have to be ok with my choice and trust it.
Did knowing “the rules” help with my fear of not making the right choice? Yes and no. It makes me feel more confident that I have chosen something cost effective and diverse, but I can’t possibly know if one fund is better than another fund. Things change so quickly, that even investing on different days can affect your long-term results. I don’t know about you, but I don’t have a time-machine or a crystal ball!
(And do you know something, financial advisers don’t either.)
Feel The Fear
I now realise that I picked my portfolio choices DESPITE being fearful of doing the wrong thing, or worried I was “missing out” on something better. It’s a normal part of being human to feel fear. It’s how we protected ourselves back in the caveman days so that we avoided being eaten by predators or choosing poison berries to eat.
I recall reading a book once called “Feel The Fear And Do It Anyway” by Susan Jeffers, and my goodness how this has changed my life. If you haven’t read it yet, I encourage you to do so.
In one of the chapters, she talks about making choices and accepting that choice despite being worried that it won’t be the right one. She says that all paths have their own flavour, and all have their own outcome. They are equally as brilliant as one another if we choose to see this. She was explaining this using an anecdote about one of her students who was worried about picking the wrong job. This is coming from a place of fear over doing the wrong thing. It’s not a question of asking “which is better”, it’s about knowing there is uncertainty in every choice we make and going for it anyway because we can handle anything that comes our way. Every choice provides it’s own unique lesson. We just need to be open to look for it.
Even Celebrities Feel Fear
Even people in the limelight will feel fear on some level (despite what they try and make you believe), but the difference is that they get on with it anyway.
And to illustrate my point, take a look at this article about Adele’s stage-fright.
She is one of the most successful singers to walk the earth, yet despite this, gets scared of singing on stage(!). During her concert I went to in Paris a few years ago she STOPPED the music at the start of a song because she got a “frog in her throat” and it didn’t sound right. This takes guts in my opinion, but she did it anyway. She toured around the world DESPITE her stage fright when she had previously refused.
It doesn’t matter how successful you become, there will be fear hanging around on some level. You can hide it from the world, but it is not the truth.
So if you’re sitting on the fence about investing in something, and you think it’ll mean you’ll “lose it all”, or you’ve been burnt in the past, please know that these are normal fears. After doing some sensible research and getting an education (avoiding analysis paralysis and procrastination stagnation), eventually you just have to go for it DESPITE feeling worried you’ll do the wrong thing.
Just remember this – you can always change it later. That’s the beauty of stocks and shares. If you make one mistake, you can always sell and do something else. It’s part of the process of learning (whether it’s investing, learning a new language, or driving a car!). Fear keeps us safe, but it can easily keep us prisoner. So feel your fear, acknowledge it, but get on with the job anyway.
Good Luck! Come and let me know how you’re getting on in the free private Facebook group. We celebrate all our wins in there, so come and tell us yours.
Until next time,
Did you enjoy that? Why not try this?