Is the fear of investing hindering your financial growth? – Cowrywise survey

7 Mins read
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Why do people fear investing? How do you deal with the fear of investing? Why do people think investing is risky?

If you are one of the people that are always hesitant to invest, you probably have what is called “Investophobia”.


But, no need to panic. It’s not some deadly disease. It is the fear of investing.

Like every other phobia, it has a root cause, and we have several recommendations to help you overcome it.

Investophobia – Fear of investing, is very real

Phobias are generally known to be largely irrational fears. From a fear of cats, darkness, or heights, to phobias such as fear of riding in a car, to fear of flying, people who have these phobias can’t quite explain why they have them. Investophobia, on the other hand, is a rational fear of investing or losing money to investing.

So, if you have focused only on saving throughout your financial journey, without investing AT ALL, you definitely have investophobia.

By making deductive inferences and analyzing responses from a consumer investment behaviour survey we conducted recently, we understand that people are typically scared of investing for several reasons; from ignorance to lack of funds and for some others, previous fraudulent experiences.

The downside of living with investophobia is the possibility of missing out on opportunities to build wealth, maximize compounding, and other benefits that accompany investing.

The numbers behind the phobia: How many people have the fear of investing?

According to the survey, we discovered people were fearful of investing for 4 major reasons highlighted in the chart below:

venn diagram showing 4 major reasons people have fear of investing-cowrywise survey

So far, about 30% of respondents believe they currently do not have enough money to invest, while 11% feel investing is complicated. 14% are afraid of losing money, and 5.4% are scared to invest because they think their funds will be ‘trapped’.

Other respondents exhibited multiple fears. 10% were afraid of losing their money and perceived investing to be complex. 7% felt investing was not affordable and that investing would trap their funds. An additional 7% expressed all 4 fears. Other respondents enjoyed the security of traditional banks, while several others either don’t trust investment institutions or have had negative experiences in the past.

Ultimately, one thing is clear. If you have a fear of investing, you are not alone.

One thing people with investophobia should understand is that they have technically been investing all their lives.

The truth is that we are all investors, and investing comes naturally to us. When you put time and effort into an activity, you become better at it. If you hit the gym regularly, you get fit. If you read often, you get super-smart.

And if you maintain this lifestyle consistently, you build up on previous achievements and milestones to make even more progress, a term known as compounding in finance; it is not so complicated when you think about it.

Having an investment lifestyle

The great thing about an ‘investment’ lifestyle, is that the results are crystal clear. It can’t be hidden. Your neighbours will notice and so will your frenemies.

This same principle applies to investing money as well. Investing is a great way to get more out of your money. When you invest consistently in mutual funds and other investment vehicles, you put your money to work, ensuring you earn returns, beat inflation and diversify your portfolio, which is ultimately a better path to building wealth.

Looking at investing from this perspective, should hopefully rid you of your investophobia.

If you still aren’t convinced, here are 4 things most people said were holding them back from investing and how to overcome them.

  1. I’m afraid I might lose my money
  2. Investing seems quite complex
  3. I can’t afford to invest right now
  4. What if I need my money

Fear 1: I’m afraid I might lose my money

Coincidentally, you are not alone. From the survey, about 14% of respondents fall in this category, and would rather not invest for fear of losing money. But, the irony is that the fear of losing money is actually losing you money. By holding cash or keeping money strictly in savings, you subject your money to market forces such as inflation, low-interest rates, and concurrent monthly charges from traditional banks, that slowly but surely, chip away at the value of your funds.

“14% of respondents don’t invest for fear of losing money.

The real loss occurs when you don’t invest at all”

Remember, the principles of investing are universal, and you are already an investor, and one of the ways to overcome this phobia, is by investing in mutual funds. Mutual funds are collective investment schemes (CIS) that allow different investors with similar investment objectives, to pool their funds together. Thereafter, these funds are invested in a diversified portfolio of securities and other assets such as stocks, treasury bills, fixed-income instruments, bonds, and real estate, to meet their investors’ objectives, spreading your risk, while maximizing your returns.

Mutual funds have several benefits, namely; (1) They are low cost (2) They are managed by professionals who know about financial markets (3) They are easily accessible on the Cowrywise platform and you can start investing with as little as N1000.

In addition, we recently announced the addition of new mutual funds from Stanbic IBTC, Vetiva Capital, and FSDH to the app, ensuring users like yourself enjoy true diversification, security, and safety whenever they invest. This brings the total number of available mutual funds to 31, from top investment management companies, ensuring you have access to multiple investment options to kickstart your investment journey.

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Fear 2: Investing seems complicated

There’s a saying that knowledge is power, and in this case, knowledge truly is. 11% of respondents feel investing is too complicated, and as a result, don’t feel confident enough to start investing. But, investing isn’t as complicated as it seems; the more knowledge you possess, the more confident you’ll be, and coincidentally, we have the resources and the tool to prove it!

Cowrywise has invested heavily in financial drive, to ensure that users have a firm grasp and understanding of their personal finances and how money works through simple-to-digest newsletters, articles, webinars and events, which you can access when you sign up or check the blog.

In addition, we have also created financial tools such as the risk assessment test, which uses in-built algorithms to determine your risk tolerance, and recommend the most suitable investment options (conservative, balanced or aggressive funds) you can start investing with, based on how much risk you are willing to take.

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Fear 3: I can’t afford it right now

Conventional thinking is that you need huge sums of money to invest (30% of respondents think this way). But, when will this ‘huge’ amount of money arrive? Tomorrow? 10 years from now? If it’s impossible to tell, waiting is a waste. The truth is investing isn’t as unaffordable and inaccessible as it once was. At Cowrywise, we believe everyone is an investor, and therefore, everyone should have access to investment opportunities.

In this vein, any retail investor with the Cowrywise app is holding an investment powerhouse in the palm of their hands – giving you access to 31 mutual funds to invest in from 10 of the top asset managers in the country. And the best part is you can start investing with N1,000 or more. If you can buy airtime or pay for data subscription, you should be investing, no excuses.

Are you ready to take your first step to build wealth for the future you desire?

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Fear 4: What if I need my money?

It’s ok to need money, especially when it’s YOUR money. Coincidentally, 5.4% of respondents feel this way. But, in the event you need to withdraw from your investments, you can do so on the app by simply selling your investment units. The equivalent value will be deposited in your stash (in-app wallet), after which you can withdraw the funds to your BVN-linked bank account. The process is straightforward and flexible.

As a wealth management company, we want to help you make the most of your investments, which is why we have innovative products such as emergency plans. Emergency plans help you put aside money for a rainy day, helping you to stay ahead of life. This ensures you stay on the course with your investment objectives, without the need to make numerous withdrawals to sort out life’s issues.

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Where you invest matters

It’s one thing to understand how investing works, it’s another thing to know where to invest. And investing with the right business is critical to ensuring your wealth lasts.

Here are 5 reasons you should invest with Cowrywise

1. Industry-leading security

In addition to our SEC licensing, we employ superior security and technical structures, covering measures such as bank-grade encryption and two-factor authentication, as an extra layer of protection (beyond just a username and password), to keep your account safe and secure

2. Best-in-class assets

All the investment options listed on Cowrywise, are carefully screened, and managed by professional fund managers. All the diverse mutual funds are SEC-authorized, with a standard third-party custodian structure.

3. We have a custodian

All our users’ financial assets are held with Zenith Nominees Limited, (duly licensed by the CBN & SEC as an asset custodian, and is a subsidiary of Zenith Bank Plc). At no time, is Cowrywise in possession of our client’s investments.

4. We abide by regulations

Before we became a licensed fund manager, we were the first fintech to implement the trustee structure, with our partnership with Meristem Trustees Limited. Now, we are the only fintech with a fund management license from the SEC. The license from the SEC, (the highest regulatory authority on financial securities and the capital market in Nigeria), gives Cowrywise the authority to offer investment products to different classes of investors. We’ve always been pro-regulation to ensure we solidify trust in our capabilities.

5. Our investments are registered

All investments on our platform, including savings plans and mutual funds, are registered and approved by the SEC.

6. We are pro-transparency

Investors have access to the necessary information and details of the respective mutual funds they want to purchase on our platform. We took great care to provide our users with details such as the size of all our funds, prospectus, historical fund performance, fund composition, and risk level of the fund, as well as the identities of the trustee, custodian, registrar, and management fees. All this information is there to help customers identify, compare and ultimately, make better investment decisions.

By now, you should be completely cured of your investophobia! Hooray! It’s time to take the next step in your journey. So, what’s holding you back? Sign up below to get started.

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