Slight fear of investing in general now

[TheBogleWay]

Hi BH,


For better or worse (probably worse) as I've gotten older I've defined a lot of myself based on what I *expect* I'll be able to do for my current and future family/friends as a provider. It's a giant deal to me and extremely important to me, I have a lot of people who will depend on me.

On top of that, I've been investing ALL my leftovers into the market/stocks (lazy 3 fund portfolio) and as I get older, it becomes a bigger summary of my life's work/efforts and restraint on spending and a bigger chunk in general/more important to me.

As it gets more important, I'm getting more of the same fear I'm sure all of you have. I don't have real estate, my lazy 3 is everything to me.

My concern (though it's more emotional than logical.. I hope?) is about money/fiat currency/stocks in general. It's a really high level thought that is hard to carry out in a deep way. At a high level, it's pretty much "what if our financial system does not continue to work" - if a war broke out that devastated parts of the country and thus the economy? Or.. a giant natural disaster? Financial collapse? Stocks simply hit a 1929 style depression and just don't recover for 4-5 decades?

I tend to think our society is more fragile than we realize. A big natural disaster could set us back, along with many potential things as above. My fear is what if there's a crash that can't recover.

My logical side (and it's hopefully not confirmation bias) tells me that many more rich, more powerful people are fully invested in the market, and like it or not the rich and powerful control the rules. It leads me to think that if one of the main drivers for wealth in the US (stocks/investments) were to fail that "someone else" would fix it...

This fear isn't really a fear of me selling during the inevitable recession, more so something more devastating. Obviously there's no guarantee and it's a risk, I'm aware of that, but can some of you who have thought about this more comfort me, if I should be comforted?

Just to clarify, it's not some overwhelming fear, most of the time I feel fine and excited, but it was enough to make a thread asking for the thoughts of people smarter than me.

Thanks!

[Finridge]

This is completely normal. As you get older and your portfolio grows (i.e. you have more to lose) while your future earning power diminishes (i.e. you have less time to make up any losses with earnings from your work)--it is expected that you will get more risk adverse.

You should probably re-examine your asset allocations and increase the percentage of bond funds you hold. Adjust your portfolio to your comfort level. If you were invested in a Vanguard Target fund they would do this automatically. But I prefer the three fund portfolio approach, because this gives you the ability to tailor the allocation to your specific risk tolerance.

[GoldenFinch]

I have been feeling the exact same way and thinking the exact same thing. I’m just going to stay the course. But lately my nerves of steel aren’t feeling so steel like.

[TheBogleWay]

This is completely normal. As you get older and your portfolio grows (i.e. you have more to lose) while your future earning power diminishes (i.e. you have less time to make up any losses with earnings from your work)--it is expected that you will get more risk adverse.

You should probably re-examine your asset allocations and increase the percentage of bond funds you hold. Adjust your portfolio to your comfort level. If you were invested in a Vanguard Target fund they would do this automatically. But I prefer the three fund portfolio approach, because this gives you the ability to tailor the allocation to your specific risk tolerance.

Thanks. As I get older, I intend on adding more bonds. I still have a good 2.5 decades until retirement.

I *think* I'd be find staying the course on a recession even if my net worth dropped 40-50%.

My feat is a little deeper/scarier of more significant things, mostly the lack of a recovery type scenario and looking for smart minds to share thoughts on that and tell me if it's a reasonable fear and how they manage it.

[AlohaJoe]

My concern (though it's more emotional than logical.. I hope?) is about money/fiat currency/stocks in general. It's a really high level thought that is hard to carry out in a deep way. At a high level, it's pretty much "what if our financial system does not continue to work"

Everything you mention has already happened and society carried on just fine.

if a war broke out that devastated parts of the country and thus the economy?

You mean like WW1 or WW2? Look how quickly all the countries involved in that recovered. Or the Korean War (for Korean). Or the Vietnam War (for Vietnamese).

Or.. a giant natural disaster?

Like the Great Kanto Earthquake that killed 140,000 in Japan in the 1920s? (Yet they obviously had no problems recovering quickly enough to start a war with the US in 1941.) Or the 2011 Tohoku Earthquake & Tsunami that killed 15,000 and did $360 billion in damage? (That is, 5x the deaths and 3x the cost of Hurricane Katrina in a country 1/3rd the size of the US.)

Financial collapse?

There was financial collapse in 2008 (in the US and 2010 (in Europe).

Stocks simply hit a 1929 style depression and just don't recover for 4-5 decades?

Stocks in Japan have been down for 28 years.

The actual evidence is to the contrary -- society is extraordinarily resilient.

I mean...all the things you talked about...all of them, not just one, happened to Japan in the last 75 years and it is still a rich & happy country.

[camillus]

The human brain is interesting. It's a fear machine. That's what makes genes survive.

I wonder if there's someone like the OP, who instead wakes up in the middle of the night in a cold sweat - "I wonder if things are much, much more resiliently on an upward trend than anyone realizes?"

A part of this is analyzing your fears. How rational are they? What if the worst really did happen? (Thanks for those examples above)

[Ari]

I wonder if there's someone like the OP, who instead wakes up in the middle of the night in a cold sweat - "I wonder if things are much, much more resiliently on an upward trend than anyone realizes?"

I don't wake up in the middle of the night, but I have a feeling that just never really goes away that everything is actually pretty good, especially compared to the past, and it's all improving in almost any way you can measure. That nothing short of an earth-ending meteor strike can stop humanity's progress once it's gotten this far. and also that if things got really bad and I lost everything, society collapsed and I had to make do with subsistence farming, that could be a pretty worthwhile life, as well, as the very many happy people in poor countries show.

I guess I'm just wired differently?

(And yes, no shocker, I'm a 100% stocks guy. )

[Nissanzx1]

Print a chart of total us stock market performance over the last 100 years and hang it on the wall. Walk by it everyday. It's inspiring.

This feeling is normal. Stay the course. If you get really freaked- increase liquid emergency fund savings.

[HEDGEFUNDIE]

I wonder if there's someone like the OP, who instead wakes up in the middle of the night in a cold sweat - "I wonder if things are much, much more resiliently on an upward trend than anyone realizes?"

I don't wake up in the middle of the night, but I have a feeling that just never really goes away that everything is actually pretty good, especially compared to the past, and it's all improving in almost any way you can measure. That nothing short of an earth-ending meteor strike can stop humanity's progress once it's gotten this far.

There is a book about that https://en.wikipedia.org/wiki/The_Bette ... Our_Nature

As for the OP, expropriation is a real risk that has happened in many countries. If you are concerned about that look into getting dual citizenship and real estate in another country.

[RadAudit]

as I've gotten older I've defined a lot of myself based on what I *expect* I'll be able to do for my current and future family/friends as a provider. It's a giant deal to me and extremely important to me, I have a lot of people who will depend on me.

I had a similar problem, until I realized there isn't but so much one can do and so much one can control. (Boy, that's an upper! ) With a lot of luck, we paid off the mortgage, got the kids through college, and are currently moderately comfortable - so far. But I've come to realize that I haven't been able to invest enough to make the kids and grandkids rich beyond the dreams of avarice. Or, pay for the grandkids college educations in Ivy League schools. Or, etc.

You might want to reevaluate whether or not what the "lot of people" are depending on you to do and whether or not their expectations are realistic. That's not necessarily a reason to quit trying but it may help to define the size of the problem.

[Dottie57]

This is completely normal. As you get older and your portfolio grows (i.e. you have more to lose) while your future earning power diminishes (i.e. you have less time to make up any losses with earnings from your work)--it is expected that you will get more risk adverse.

You should probably re-examine your asset allocations and increase the percentage of bond funds you hold. Adjust your portfolio to your comfort level. If you were invested in a Vanguard Target fund they would do this automatically. But I prefer the three fund portfolio approach, because this gives you the ability to tailor the allocation to your specific risk tolerance.

Thanks. As I get older, I intend on adding more bonds. I still have a good 2.5 decades until retirement.

I *think* I'd be find staying the course on a recession even if my net worth dropped 40-50%.

My feat is a little deeper/scarier of more significant things, mostly the lack of a recovery type scenario and looking for smart minds to share thoughts on that and tell me if it's a reasonable fear and how they manage it.

In many ways not having portfolio information available on the internet was good for me. I didn’t know my balances and kept plugging away through 401k. I always had at least 20% bonds or more. I just kept putting 15% away through all markets. It works. So don’t worry. You will have more at retirement time than if you don’t keep investing. Just keep the investment rhythm going. Beat after beat.

[CaliJim]

What is this "financial system" that you fear may stop working?

If the financial "system" stops working... you will have more than the loss of wealth to worry about........ because what you are really talking about is social collapse.

Accept that some things are outside of your control and ability to plan for.

Know that "the financial system" is not a fragile vase that can fall on the floor and shatter.

It is an artifact.... an illusion of sorts.... made up of myriad 'subsystems', transactions, interactions, and human behaviors.

And if you believe Steven Pinker's hypothesis in "Enlightenment Now".... things, in general, are actually getting better, not worse.

We have shifted from bartering with beads and coins to entries in ledgers.

But ultimately, accumulation of wealth is based on a simple little agreement..... that it is good to pretend that a bead or coin or ledger entry can be used as a store of value.

OMG... what would it be like if we were instead forced to accumulate and defend actual stuff in order to be wealthy?

We'd be back in the feudal days with castles and motes and personal armies. I don't think "going there" is in our collective vision.

Don't fear investing. It is here to stay for the foreseeable future.

[LongTermInvestor88]

The BogleWay

You sound like you have really let your fears get the better of you. I understand this and admire how much you want to help your loved ones financially. I have to say though I don't agree with some of the advise you have been given specifically increase bonds especially as you have 25 years of earning ahead of you. My main concern is although you have a great name : ) I don't think you understand Jack's theory of investing. I would reread common sense investing that's what I do when my emotions get the better of me. For the senarios you spelled out to devastate your portfolio the only thing that would REALLY devastate it is if corporations stopped making profits. That is not going to happen. They go up they go down the name of the companies change even the best performing country's change (global investing is safer) but the global economy goes on and it over time gets bigger. As long as you have a sensible allocation to safe bonds (treasuries best) you will be ok. Let's face it the whole financial system went into melt down in 2008 and a 20% allocation to bonds got you back to equal in about a year and half to two years in my knowledge that is even without continuing to buy more stock when the price decreased. Good luck give yourself a break you will be fine. Continue to pay in and switch off the news

[Jordan4FI]

If war or disaster break out in that large of an area, you may not even survive it, many will die, and good chance we are one of them. We will all be poor, broken and fighting together (or whatever side you choose to be on).. We have advanced to far too quick, that when it goes down, we are all screwed, with out light, running water, phones and computers, most of us will wither away in the dust that is the new world..

Best hope is to move away, to a vast area of farm land and learn to take care of yourself the natural way.

[CaliJim]

Best hope is to move away, to a vast area of farm land and learn to take care of yourself the natural way.

Unfortunately, there isn't enough room on the planet for each family to all have "10 acres of independence". Stewart Brand talks about this in "The Whole Earth Manifesto".

[daveydoo]

Same. Some things are so awful that you really can't prepare...or can only prepare by seriously handicapping your future performance and lifestyle in the other 99.99% of possible scenarios for the future. I don't think gold will be helpful if the world ends (I know, just lead). I try to do my part by being personally responsible and voting accordingly. We're not "preppers" but we've made a few decisions that could help get us through a finite period of national or global bad times. It would be hard to live off the grid from where we are now, though.

You are vulnerable because you have people you care about and you have enjoyed financial success by virtue of your hard work. You have way more to lose than most, although perhaps not most on this forum.

[TN_Boy]

Hi BH,


For better or worse (probably worse) as I've gotten older I've defined a lot of myself based on what I *expect* I'll be able to do for my current and future family/friends as a provider. It's a giant deal to me and extremely important to me, I have a lot of people who will depend on me.

On top of that, I've been investing ALL my leftovers into the market/stocks (lazy 3 fund portfolio) and as I get older, it becomes a bigger summary of my life's work/efforts and restraint on spending and a bigger chunk in general/more important to me.

As it gets more important, I'm getting more of the same fear I'm sure all of you have. I don't have real estate, my lazy 3 is everything to me.

My concern (though it's more emotional than logical.. I hope?) is about money/fiat currency/stocks in general. It's a really high level thought that is hard to carry out in a deep way. At a high level, it's pretty much "what if our financial system does not continue to work" - if a war broke out that devastated parts of the country and thus the economy? Or.. a giant natural disaster? Financial collapse? Stocks simply hit a 1929 style depression and just don't recover for 4-5 decades?

I tend to think our society is more fragile than we realize. A big natural disaster could set us back, along with many potential things as above. My fear is what if there's a crash that can't recover.

My logical side (and it's hopefully not confirmation bias) tells me that many more rich, more powerful people are fully invested in the market, and like it or not the rich and powerful control the rules. It leads me to think that if one of the main drivers for wealth in the US (stocks/investments) were to fail that "someone else" would fix it...

This fear isn't really a fear of me selling during the inevitable recession, more so something more devastating. Obviously there's no guarantee and it's a risk, I'm aware of that, but can some of you who have thought about this more comfort me, if I should be comforted?

Just to clarify, it's not some overwhelming fear, most of the time I feel fine and excited, but it was enough to make a thread asking for the thoughts of people smarter than me.

Thanks!

I think it is normal to worry more about that nest egg as you get older. That said, I was puzzled by this:

"I've defined a lot of myself based on what I *expect* I'll be able to do for my current and future family/friends as a provider. It's a giant deal to me and extremely important to me, I have a lot of people who will depend on me."

It's great if you can leave a legacy to people you care about, or even help them while you are alive. But, why do you have so many people around you that apparently cannot take care of themselves? Are they disabled? Working hard for a cause but they have no money? I'm serious, to me the biggest gift a parent could give their children is independence. I realize there could be family members in tough situations due to bad luck, but why (in general) are so many depending upon YOU? Including friends?

As for the overall "fear of disaster" AlohaJoe had a nice post on how Japan has managed to survive and proper despite a litany of disasters. You could also wander around parts of Europe a bit and think "wow, this piece of land was a war zone in both WW I and WW II!" yet somehow Europe survived all that as well.

If things collapse and a globally diversified portfolio melts away and doesn't come back, I doubt there is anything you can do to prepare for that.

[Fallible]

This is completely normal. As you get older and your portfolio grows (i.e. you have more to lose) while your future earning power diminishes (i.e. you have less time to make up any losses with earnings from your work)--it is expected that you will get more risk adverse.

You should probably re-examine your asset allocations and increase the percentage of bond funds you hold. Adjust your portfolio to your comfort level. If you were invested in a Vanguard Target fund they would do this automatically. But I prefer the three fund portfolio approach, because this gives you the ability to tailor the allocation to your specific risk tolerance.

Thanks. As I get older, I intend on adding more bonds. I still have a good 2.5 decades until retirement.

I *think* I'd be find staying the course on a recession even if my net worth dropped 40-50%.

My feat is a little deeper/scarier of more significant things, mostly the lack of a recovery type scenario and looking for smart minds to share thoughts on that and tell me if it's a reasonable fear and how they manage it.

OP, to respond to your comments that I 've boldfaced: As investors, the main way we can help manage the fears and uncertainty in life is to choose an asset allocation that is right for us, i.e., to decide how much risk to take based on our need, ability, and willingness to take it. In determining our risk tolerance (willingness), we should ask how much money we can afford to lose in a crash before we'll need it. We should also realize that personal risk tolerance changes often, sometimes warranting a lowering of equities, sometimes not. When the allocation is chosen, we can write up an Investment Policy Statement to refer to when irrational fear or anxieties tempt us to change an allocation.

The fear you mention about a "lack of recovery scenario" is justified because that is what very nearly happened in the '08 crisis when a credit crunch developed, threatening a financial meltdown. Another crisis will happen and recovery might again be that uncertain. So, if you were investing during the '08 crisis, how you managed your fears then can guide you in managing them now.

Then again, if you have taken all of these investing steps and still struggle with fear, you might be interested in learning about fear in general in a book by WSJ columnist Jason Zweig, Your Money & Your Brain, the chapter on "Fear." One thing you'll learn for sure is that you are not alone.

[Fallible]

Delete repeat.

[beyou]

Print a chart of total us stock market performance over the last 100 years and hang it on the wall. Walk by it everyday. It's inspiring.

This feeling is normal. Stay the course. If you get really freaked- increase liquid emergency fund savings.

If I only had 100 years remaining....

[TheBogleWay]

Appreciate the replies in here.