Making Friends With Your Financial Fears By Mark Ford
Last week, I wrote an essay about protecting your wealth by using stop losses, diversification, legal strategies, and tax planning.
I thought it was a good essay. It covered, I thought, everything I knew on the subject. But I’ve been thinking about it since then and realized that there was one important idea I did not include. It is perhaps the most important idea.
You see, the essay was in response to a reader who was obviously afraid of losing the wealth he had. The fear of losing something you value is completely natural. And it is also healthy as long as the fear is not too great. But when fear is great—and I sensed that for this person it was—it can be destructive. Unbridled fear produces two negative responses: immobility and rashness.
When you fear too much, you won’t take the positive actions you suspect you should. When opportunities are presented, you’ll shun them for fear of the potential dangers and downsides.
Tim Mittelstaedt, a research analyst at The Palm Beach Letter, sent me the following note after he read the first draft of this essay:
“I’ve wanted to buy rental real estate since high school more than 13 years ago, but fear (Read more....)
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