Front Page|Our Services|Our Team|Client Center|Financial News|Events|Contact Us

Financial Briefs

More Articles  Printer Friendly Version


Dealing With Financial Fear

4934 1

If you suffer from financial fear and anxiety, talking about it is likely to help.

In talking about it, according to Dr. Frank Murtha, a financial psychology expert, you go through a process of recognizing, understanding, and constructively reacting to your fear, rather than keeping it inside you and causing anxiety.

4934 4

Whether your fear is running out of money in retirement, paying back a large debt, or caring for a family member with special needs, Dr. Murtha says personal financial issues evoke the full spectrum of human emotions -- from panic to irrational exuberance and everything in between -- but fear is the emotion that stands out as most impactful.

Professors Daniel Kahneman and Amos Tversky, founding fathers of the burgeoning social science of behavioral economics, famously discovered that people do not fear risk in investing; people fear a loss, specifically, a loss of control of the future.

In fact, investors who have suffered an investment loss or financial setback often will actively seek out risk to break even and avert the loss. Of course, “doubling down” may actually compound a financial problem.

How we experience fear is partly dependent on physiology -- your brain chemistry. The fear center of the brain is called the amygdala and it triggers several instinctual reactions to fear. The “fight” instinct can be evoked. Although this reaction may come in handy when you’re getting physically attacked, it is not helpful in financial dealings.

4934 6

A more common reaction to fear is flight -- the desire to remove the reason for experiencing fear, to retreat to safety and get back in control of your situation. In financial terms, the flight instinct may make you want to sell a losing investment at the height of a pandemic or amid a global financial crisis.

The other lesser-known neurobehavioral fear reaction is another F word. Can you guess what it is? The answer is “freeze.” Freezing is a typical reaction in times of rising fear. You become too afraid to do anything! “People get stuck, unable to make a decision to change a situation and they let anxiety get the best of them,” says Dr. Murtha. “A big part of dealing with financial anxiety is simply getting unstuck.”

Talking about financial anxiety can help you unburden yourself and that is often the first step toward re-instilling a sense of control, which is the key to fighting fear.

Nothing contained herein is to be considered a solicitation, research material, an investment recommendation, or advice of any kind, and it is subject to change without notice. Any investments or strategies referenced herein do not take into account the investment objectives, financial situation or particular needs of any specific person. Product suitability must be independently determined for each individual investor. Tax advice always depends on your particular personal situation and preferences. You should consult the appropriate financial professional regarding your specific circumstances. The material represents an assessment of financial, economic and tax law at a specific point in time and is not intended to be a forecast of future events or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete, and is not intended to be used as a primary basis for investment decisions. This article was written by a professional financial journalist for Advisor Products and is not intended as legal or investment advice.

Email this article to a friend

A Crucial Investment Lesson From A Difficult 20 Years
Is The Expected Income Tax Hike Going To Affect You?
2021 Year End Tax Planning: Higher Stakes And More Confusing Than Ever
Making A Life-Changing Financial Difference To A Spouse And Needy Loved Ones
Retirement Planning Alert For Current Financial Economic Circumstances
In An Era Of Financial Windfalls, Avoid This Mistake
As S&P 500 Closes At All-Time High Again, It’s A Great Time For A Crisis Plan
Confounding Valuations Of The Largest Five Companies In S&P 500
Stocks Averaged A 7.35% Premium Annually Over T-Bills For Past Two Decades
The Persistent Leadership Of U.S. Stocks
A Financial Planning Accident Waiting To Happen
Tax Alert For High-Income And High Net Worth Individuals
Five Years Ago In Financial Economic History
Here's What's Happening Now In Wealth Management
Making A Financial Transition? Answer These Five Questions

This article was written by a professional financial journalist for Vantage Point Financial Services, LLC and is not intended as legal or investment advice.

©2021 Advisor Products Inc. All Rights Reserved.
© 2021 Vantage Point Financial Services, LLC | 329 Regency Ridge Drive, , Centerville, OH 45459 | All rights reserved
P: 937-432-1111 | F: 937-432-1110 |
Contact Us

Securities offered through First Allied Securities, Inc., A Registered Broker/Dealer, Member: FINRA / SIPC.
Advisory services are offered through First Allied Advisory Services, Inc., A Registered Investment Adviser.

This site is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any security which may be referenced herein. We suggest that you consult with your financial or tax advisor with regard to your individual situation. This site has been published in the United States for resident of the United States. Persons mentioned in this site may only transact business in states in which they have been properly registered or are exempt from registration.

Privacy Policy | ADV