It’s thrilling to face what frightens us. That’s why we watch horror movies, tell ghost stories, and decorate our houses with skulls and spiderwebs every October.

But when it comes to our finances, most of us would rather feel safe and secure. According to a recent Ally Invest survey:

  • Sixty-five percent of adults say they find investing in the stock market to be scary and/or intimidating.
  • Gen Z (ages 18 to 23) and millennials (ages 24 to 37) are more fearful than the Greatest Generation.
  • Almost three-quarters of  the millennials who are afraid of losing money when they invest are women compared to about two-thirds of men.
Someday Scaries survey reveals that 69% of Gen Z, 66% of millennials, and 65% of Gen X find investing in the stock market to be scary and/or intimidating, while most Gen Zs and Millennials believe social security won't be there for them.

While you might feel safer tucking your money into a high-interest savings account, building wealth for a stable, secure financial future often takes developing an investment portfolio and contributing on a regular basis.

To do this, you must conquer your investment fears.

We took a look at some of the most common reasons why you’re scared and paired them with classic Halloween-isms and financial tips to help you unmask your investment fears.

Fear Factor #1: Losing Everything

If you came of age during the dot-com crash, the post 9/11 downturn, and the Great Recession—you witnessed plenty of scary financial outcomes. People close to you may have struggled with job loss or foreclosure, and in some cases, lost everything. While fear is certainly understandable, it can significantly limit your ability to reach your financial goals.

Reality Check: Ups and downs are an inevitable part of investing, but history shows those who take a long view and stick to their investing principles are likely to come out on the sunny side of the street. In fact, Investopedia reports that in the past 90 years, the average annual return of the S&P 500 is approximately 10 percent.

A downturn may feel like financial Armageddon, but you need to trust that the market is like a zombie: it’ll come back to life.

Do It Right: Certainly, returns are not guaranteed and each year’s growth can vary. But if you begin investing at age 25 and keep your money in the stock market—there is potential to build significant wealth—despite natural downswings likely to occur from time to time. The key is to stick with a solid investment strategy.

What are you scared of? Over half of Americans are scared at the thought of losing money (72% of Women, 65% of Men), 27% are scared about not knowing how to get started, 34% of not knowing whom to trust for advice, 19% about the time it takes to invest properly, 17% that the market has passed them by. 15% aren't scared of anything when it comes to investing and 1/3 find the amount of money required to invest scary.

Fear Factor #2: Not Knowing Where to Start  

Once you’ve conquered the fear of investing, it’s time to build your portfolio. We know. We know. That can be easier said than done. Here are a few primers to get you in the know.

There are two common ways to invest: self-directed trading and robo portfolios.

Generally speaking, investments are usually divided into two categories: aggressive and conservative.

  • Stocks are aggressive and can provide greater growth.
  • Bonds are conservative and can provide more stability.

What’s even more conservative than the above? Cash—and risk-adverse millennials are all about it. A 2018 Bankrate survey reports that 30 percent of millennials favor cash for long-term investing, while larger percentages of Gen X, Baby Boomers, and the Silent Generation prefer stocks. Stashing cash in CDs (certificates of deposit) is one example of using cash for long-term investing.

Reality Check: Cash investments are less prone to market volatility, making them seem like a safe and smart move on paper. But in reality inflation can catch up with you in the long run. Opting for cash over stocks or even bonds could lead to lower returns and might push back your retirement.

Do It Right: An investment portfolio that consists of a diversified mixture of stocks, bonds, and cash can be a successful investment strategy.  If you’re unsure where to start, check out our Invest for Success Guide. Or have a little fun and answer these four questions to find out your investing animal spirit.

What are Americans currently relying on for retirement? Social security (53%), Savings (45%), A 401(k) (33%), A pension 23%), Investment in stocks and bonds (23%), An IRA (21%), Selling real estate/downsizing (11%), Something else (3%), NONE - not going to retire (11%)

Fear Factor #3: Trusting the Wrong Source

Whether you’re purchasing stocks, mutual funds, exchange-traded funds (ETFs), or bonds, it’s important to consider the fees associated with them. That’s because if you’re not careful, fees can diminish your investment returns—and your bottom line.

For example, if a fund averages a 7.5 percent annual return and has fees of 1.5 percent, the fees eat up a whopping 20 percent of your returns.

Be a vampire hunter and be on the lookout for these common fees that can suck up your returns:

  • Expense ratio: A yearly fee that’s a percentage of the money you have invested in index funds, mutual funds, and ETFs.
  • Brokerage account fee: A charge for having a brokerage account or accessing a trading platform.
  • Sales load: A commission that’s paid on some mutual funds to a broker.
  • Trade commission: Often a flat fee that’s paid when you buy or sell a certain investments, like stocks, ETFs and options.
  • Advisory or management fee: Usually a percentage of your portfolio’s balance for advisement from a financial advisor or robo-advisor.

Do It Right: Typically, actively managed portfolios have higher fees than passively managed portfolios. Our cash-enhanced Robo Portfolio offer professionally-managed portfolios without advisory fees.

Ally Invest customers say that online investing has helped them improve their financial position (70%), made the process less intimidating (81%), made it easier to manage their investments (89%)

Fear Factor#4: Not Enough Money to Invest

It can be difficult to save for retirement. Especially when you’re paying student loans, buying a home, or relocating to another state. But to avoid investing altogether can impact your future earning potential.

Reality Check: You don’t need a lot of money to invest. Whether you set up automatic monthly contributions of $25 or $250, the most important thing is that you start investing early. Thanks to the magic of compound interest, a small investment at age 25 can be more valuable than a larger investment at age 40.

Do It Right: Once you get in the habit, increase the amount you set aside by 1 percent each year. This can help ensure you’re on the right track to a secure financial future.

Getting scared now and again can be fun. But confidently watching your portfolio’s balance grow? That’s where it’s at!

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