Facing
and overcoming fear with decisive action is a step that
cannot be avoided on the road to financial freedom.
Fear is one of the most basic human emotions. I guess
it could be considered a healthy emotion if it’s
stopping you from standing too close to the edge of
a cliff for fear of falling off, but I believe in most
cases fear is limiting. It can hold us back from taking
calculated risks which could actually be really good
for us. Another thing I’ve learnt is that knowledge
and faith can overcome most fears, like shining a torch
into the darkness.
The reality is it’s impossible to avoid risk
completely in any situation. So letting fear decide
your action is not foolproof protection against danger
anyway. The only real way to manage risk is to put
fears aside and look at the facts.
I’m a realist. For me, it’s all about
calculating how much risk is involved in a situation
versus what the opportunities might be. And if I can
see a good reason to take a risk, it’s about
facing my fears and doing it anyway.
When it comes to investing and financial planning,
I see fear holding many people back from achieving
their dreams. The fear of what could go wrong combined
with a lack of knowledge leads them to the point where
they feel it’s all too hard and they want to
leave it to deal with another day. There’s always
a good reason to put it off, why they can’t afford
to save or invest just yet – braces for the kids,
school expenses, car repairs, a holiday. Sometimes
the day to take some action never comes.
The bad news we’re hearing constantly at the
moment creates another great reason to postpone facing
this fear. Who on earth would want to invest in shares
or buy property when everything is reportedly so bad?
I saw an article today with a very serious and gloomy
tone predicting that unemployment will rise to 4.75%
by June next year. How is this bad news? As I understand
it, this is still much lower than it’s been in
many years. (Note: 8 months later and we’re heading
for 8%! S McCarthy – April 24 2009).
It’s definitely true that there are some people
struggling. But in my opinion, this type of article
just has the effect of making many people who are not,
become even more paralysed by the fear of what could
go wrong if they start building wealth now.
During the recession of the early nineties, unemployment
rose to around 11%. Lots of people lost their jobs.
Even then though, the reality is the vast majority
of people kept their jobs; 89 out of every hundred
in fact. So is the glass half full or half empty? In
the case of the current talk about unemployment, it’s
more than half full, it’s 95% full!
Despite all the scary talk, history proves that even
in the worst economic times, smart people spot opportunities,
ride the waves and make money. In 1992 at the height
of the recession you couldn’t give houses away;
no one was buying. Which meant it was a great time
for clever investors to buy well. Those people made
lots of money. Ask anyone who was around at that time
and I’ll bet in hindsight they wish they had
bought as many houses as they could have managed at
such low prices.
As I’ve said before, the other important truth
to face when it comes to financial planning is; if
you allow yourself to be paralysed, if you do nothing,
the bad news is these days you are pretty much guaranteed
a bad outcome. And that’s even if you manage
to pay off your home and have a super fund when you
retire. If you don’t have any money, you need
to do something even more. It’s as simple as
that.
And here’s the best part about facing your
fears head on; it’s really good for your mental
health!
I hosted a Celebration of Success dinner for some of our seasoned investors
a year or so ago. Many of the people who came along were on their second
or third purchase, some even further along. I asked everyone present
to put up their hands if they felt scared when they bought their first
property. Almost every hand in the room went up. I asked those who had
gone on to buy more to keep their hand up if they were still scared the
next time around. Almost every hand went down.
I then asked the room to put their hand up if facing
that fear the first time had made them bigger people
in their daily lives, more confident in facing other
fears generally. Almost every hand went back up and
the beaming smiles I saw on faces all around the room
said more than any words could.
I don’t know how many times over the past ten
years in this business I have heard someone thank me
and tell me how much better their life is, how much
happier they feel. How that’s all because they
have faced their fears and now they know financially
their family is going to be OK. And that having done
that they feel like they can do anything.
So if you haven’t already, make today the day
you face your fear of making a financial plan. As with
any journey, the first step is the hardest but also
the most worthwhile.You might just find that along
with financial freedom comes a personal growth you
didn’t expect.
by Stephen McCarthy
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