When people think about investing in stocks, they often feel scared or uncomfortable. The biggest obstacle holding them back is the fear of losing their money.

It is normal to be scared when you begin investing. Even investors who've been doing it for years get nervous sometimes. People make mistakes, let their feelings take over, and end up losing money because of things they can't control. If you're new to investing, you're stepping into unfamiliar territory.

Like with most things that scare us, there are steps you can take to get past these worries and become good at investing.

5 Common Reasons Most People Fear Investing

The following is a list of the five most prevalent reasons why Indians are afraid to invest: 

1.Fear of Losing Money

Every human being most likely experiences the fear of losing money since it is rooted in a deeper psychological instinct that is fundamentally connected to survival impulses. Throughout much of human history, the loss of resources has been a matter of life or death. The idea of loss aversion, which holds that the psychological impact of losing is double that of winning, is a common manifestation of this. This is one of the reasons why Indians shy away from investing; they fear losses.

2.Lack of Knowledge

Due to a lack of knowledge, stock market activities are mostly viewed to be complicated and sometimes scare the investor away. For example, Priya was afraid of investing. She was not aware of some important terms, such as 'dividends' or 'market capitalization.' As a result, this aspect of ignorance plays an important role in not letting the person take the first step toward going ahead with the investment.

3.Reacting to Market Volatility

The innate volatility of the stock markets breeds uncertainty among ordinary public investors. For example, when the Sensex and Nifty50 fell markedly in early January 2025, many investors sold out rather than hold some shares for better days. Such reactions invite losses when the markets turn favorable again.

4.Being Left Behind

The worry of falling behind, commonly known as FOMO (fear of missing out), frequently keeps people from developing money in the stock market. Humans appear to be innately competitive. People feel dissatisfied when they see others living a "better" life, which is amplified by social media. We often define our worth by comparing ourselves to others. This behavior sometimes affects our investment approach.

5.It's the Fear of Making a Mistake

Fear of being robbed of investment opportunities comes from stories of others losing money through bad choices. For instance, Neha was afraid to invest because she learned about someone who lost every penny because of poor stock choices.

5 Ways to Overcome Stock Market Fear

Below are five practical solutions highlighted for you to overcome your anxiety about investing: 

1.Assess your risk tolerance:

Understand your risk tolerance before investing. If you feel uncomfortable with the market fluctuations, you can consider low-risk investments such as index funds or blue-chip stocks. If you are comfortable with higher risks and higher returns, then you should consider growth stocks or sector-specific funds. Understanding your risk tolerance will ensure that your portfolio aligns with your comfort level and long-term goals.To assess your risk tolerance use this link:https://docs.google.com/forms/d/e/1FAIpQLSd261_aqybIekp7VlUOykM2o3C8r6DM8PUkt65mWrOZdV5JRg/viewform 

2.Focus on Long Term Goal-Based Approach

Focusing more on the long-term objectives is crucial in overcoming short-term market fluctuations. As history has shown, the stock market tends to rise on the whole despite the volatility. Once you set a clear long-term financial goal like retirement or funding education, you are not likely to make any impulsive decision based on market fluctuations. Staying committed to your plan and ignoring short-term noise helps you stay on track and benefit from the compounding growth of your investments over the years. Patience and consistency are key to achieving financial independence.
A study on 'Wealth & well-being' by Scripbox (a money company in Bengaluru) found that 42% of Indians thought having a plan for their money would make them feel better about the future and their overall happiness.
To calculate your required corpus and SIP investment amount to achieve that, you can refer to this link: https://daycoindia.com/sip_calculator.php

3.Avoid Behavioral Bias:

Behavioral biases, like fear of loss, regret aversion, overconfidence, and herd mentality, can lead to poor investment decisions. To avoid these, stick to your strategy, focus on long-term goals, and avoid impulsive reactions to market fluctuations. A disciplined approach and regular portfolio reviews help mitigate emotional decisions and keep you on track with your financial goals. If biases persist, consulting a financial advisor can provide an objective perspective and prevent emotionally driven mistakes. 

4.Gain Knowledge About Stock Markets

To fight fear in investing, gaining knowledge about a wide range of investments and market conditions is of utmost importance. Begin by reading an educational book or taking an online course that offers basic investing lessons. “SEBI investor awareness program” is a free program launched by SEBI on awareness about the stock market. For example, understanding how mutual funds work will surely enhance your confidence in making investment decisions. As you learn about different financial instruments and strategies, you will become more confident and able to make informed decisions with your money.

5.Avoid Any Lumpsum Investment

To avoid putting large amounts of money at one time, you could go in for a SIP (Systematic Investment Plan) as a beginner investor in the stock market. It allows you to invest small amounts at regular intervals, thus reducing the harassment of volatility in the market. For example, instead of putting ₹60,000 in one instance, you can invest ₹5,000 in an equity mutual fund monthly.

Consulting a financial advisor can give a sense of clearness and assurance in the choices you make concerning investments. This can be further broken down to include devising a strategy fitting your goals as well as risk tolerance. They will direct you through these market uncertainties. They will, in turn, suggest mutual funds and other appropriate investments for your portfolio. Overcoming fear, staying resilient, and focusing on long-term goals will help navigate the investment journey and build financial security, leading to achieving your personal financial goals.

-Sukalyan Halder & Marifur Rahaman