The psychological barriers to investing

The term confidence seems to be rather vague, or even emotional, especially as it relates to matters of finance and investment. However, the term is often used as an important indicator of financial reality. For example, the term consumer confidence has been used a lot lately, especially in relation to the American economy. It’s seen as a leading economic indicator and marker of things to come, which is very important in the economic world, isn’t it.

As importantly, the term investor confidence is also used, often to similarly indicate the future of the investment market. However, there’s another way in which the term can be used, and a recent poll reflects just how.

A lack of knowledge

Seeking help of an investment firm

Specifically, according to a survey performed by Angus Reid for Tangerine Investments, many people don’t invest not just because they’re afraid of a future downturn, or a lack of market confidence, but because they’re just afraid of investing — period. In other words, there is a lack of knowledge when it comes to simply starting the process of investing, never mind what to do when one finally decides to invest.

At the top of the list of reasons not to invest, with a whopping 70 percent of respondents citing it, was a perceived lack of money. Other reasons cited for not investing include the risk of losses, too much complexity, not knowing where to start, not trusting people with money, not enough time, and too intimidated to approach investing.

In other words, it would appear as though the psychology of investing is as much of a barrier to investing as anything else, including real-world fact. The perceived lack of money is hard to gauge objectively, and nobody should ever invest unless they can afford to. However, given some of the things people end up spending on anyhow, one has to wonder if enough thought is put into the idea that investing is an affordable option for people — a lot more than they think.

Taking that next step

As for the other responses given in the survey, it seems pretty clear that a lack of investment knowledge is at the root of most people’s failure to take that next step into the world of investing. There are various remedies to this, of course. Doing one’s own research is an option. If you can read the morning paper, you can start learning about investing, too.

Alternatively, why not take that step into the investing world by actually stepping into an office of an investment firm? Most potential investors would probably be surprised at the options available to them, as well as the availability of professionals all too eager to guide them through the process with knowledge and insight. It’s just a matter of deciding to take that next step — with confidence.

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