Scared of investing in the stock market? – 5 top tips to help

Survey data shows that out of a choice of fear or greed or neither, fear is the biggest influence for a fifth of people when making investment decisions*. For men it’s 20% and for women 24%.

But should you really be afraid of investing?

Fear is natural. Fear keeps us safe. Our ancestors needed the quick responses that fear brings to keep us safe from physical danger.

We’re afraid of lions, snakes, and spiders, because it stops us from getting bitten. We’re afraid of deep water and heights because we don’t want to fall in or over.

But in modern life you’re sometimes afraid of things you don’t necessarily need to be, like public speaking, flying or even investing. And being fearful of these things can hold you back from doing something good.

Here are five tips to overcome the fear and anxiety of investing.

This article isn’t personal advice. All investments can fall and rise in value, which means you could get back less than you invest. If you're not sure if an investment’s right for you, ask for financial advice.

Fear and courage are part of the process. Sometimes you need to look at why you’re afraid and work out if it’s justified.

Flying, for example, has the lowest rate of accidents of any public transport. But there’s always news that might make you not want to fly.

You have a choice not to fly, but if you don’t, it’s harder to go abroad. So, you might not get to see as much of the world as you want to.

Likewise, with investing, there’s always negative news about stock markets, the economy, and their future.

But over more than 100 years, in 91% of 10-year periods, stock market have performed better than cash.

So, you could be missing out on having your money work harder for you by not investing.

Investing isn’t a short-term thing. You should only invest if you’re willing to stay invested for at least five years. Over longer periods, returns are more likely to be positive, but your investments will still rise and fall in value.

So, it’s important to have a plan and make it long term. Choose where you’re going to invest, and why, and then stick to it making small tweaks along the way to rebalance your portfolio.

Part of this is choosing how much risk you want to take.

Generally, the more risk you take, the more opportunity for greater reward. You shouldn’t take more risk than you need to. But bear in mind that if you don’t take enough risk, you might not have enough money to meet your goals when the time comes to take it out.

Investing isn’t about picking one investment and hoping.

We’d suggest building a diversified portfolio. This means having a broad range of investments in different countries, industries and the right mix of shares and bonds.

Diversification will mean that as parts of your portfolio underperform, other parts might perform better. This plan can help you make decisions and give you piece of mind.

While it’s good to evaluate the data, you can go too far. Doomscrolling to try and find more information can make you more stressed and make it feel out of control.

The more you focus on something bad, the more you worry, making those negative feelings worse.

With investing, the news can influence your decisions, but some events are just short-term bumps in the road. If you have a diversified portfolio, some investments not doing as well is just par for the course.

The same goes for checking your investments. You don’t need to look at them every day – we suggest reviewing your investments at least every six months.

Take comfort in the fact your investments are for the long term, stick to your plan and don’t make decisions based on short-term noise.

Dealing with finances is usually not on the top of our to-do lists. But if you don’t, you’re never going to learn that what you think is dangerous is actually manageable.

With investing, the saying is ‘time in the market, not timing the market’.

Generally, the longer you’re invested, the harder your money can work for you. Pretty often the best time to invest was yesterday, the next best time is today.

You don’t have to invest all at once. You can do it gradually by monthly direct debit.

Setting aside money automatically makes it easier to get into good habits. You don’t even have to think about it.

If you invest by direct debit, you don’t have to worry about when the right time to invest is. You won’t be trying to time the market, worrying about whether now’s the right time to buy.

You can take advantage of something called pound-cost averaging. It’s a powerful tool to help smooth out the ups and downs of the market.

When you invest monthly, you buy more units or shares in an investment at lower prices if the value falls, helping you achieve better returns. But if investment prices keep rising, you’ll buy fewer units or shares at higher prices.

You also avoid the risk of investing all your money when the market is at its highest.

Investing monthly means that your money is taken from your bank account towards the start of the month. We take the money on the 7th or next available working day. Any money you instruct will be invested on the 10th day of the month or next available working day.

Need help investing?

If you still want to take some of the fear out of investing and want a team of experts to look after the day-to-day management, we’re launching four new low-cost all-in-one funds managed by HL experts.

You just pick the level of risk you’re comfortable with and how much you want to invest and it’s the only investment you need.

Our managers will do the hard work for you, picking investments that track the market based on your chosen level of risk. They’ll manage it, so you just need to check in on it every six months or so to make sure it’s still right for you.

You can invest from just £100 as a lump sum or £25 as a monthly direct debit.

Invest by 11:59pm 5 June to get the fixed £1 per unit launch price.

Investing in funds isn't right for everyone. Investors should only invest if the fund's objectives are aligned with their own, and there's a specific need for the type of investment being made. Investors should understand the specific risks of a fund before they invest, and make sure any new investment forms part of a long-term diversified portfolio.

HL Funds are managed by our sister company, Hargreaves Lansdown Fund Managers Ltd.

*HL Opinium Survey 2024, 770 participants.