Open the door and just jump. Simple enough instructions to follow, right? Except the door in question is on a plane thousands of feet up in the air. It becomes an entirely different matter at this point. Fear takes over, and one might freeze or entirely avoid the process of skydiving.

For some, this can be the same with investing. Most people consider investing on a whole as ‘too risky’, and as such would rather put their money in a bank account. The financial crash of 2008-9 is still fresh in the minds of many.

Some may have been burnt from investments gone wrong. Others simply do not know enough about the stock market to invest, and the rest just have not developed that culture. Whatever the reason, these fears can be overcome with the right financial advisor.

Common investor fears include lack of knowledge of the market, loss of money, and bad experiences from previous investments.

Lack of knowledge about the stock market causes fear when it comes to investing. You would not put money into a product or service that you know nothing about. Similarly, you would not buy a car without any information from the seller.

This fear can be easily overcome with research. There are many brokerage firms who are willing to provide the basic information on the stock market, both local and foreign. In this day and age, information is readily available via the internet. The Jamaica Stock Exchange has useful information on their website: www.jamstockex.com/.

First-time investors tend to invest in companies that they are familiar with and what is tangible to them. Local companies such as NCB, Caribbean Cement and Lasco Manufacturers are all listed on the Jamaica Stock Exchange. Choosing the right companies to invest in should always be done with the help of a financial advisor. Personal research along with the information provided from your broker goes a long way in instilling confidence that your funds will perform favourably.

Loss of money is another common fear of investing. Documentaries and movies have been made showing big crashes in the stock market –The Big Short, for example, which highlighted investors who bet against the market crash of 2008.

Whether you are buying shares in a publicly traded company or buying a bond issued by a government, there is always some degree of risk and the possibility of a loss. However, there are strategies to mitigate this risk.

One such strategy is diversification.

Diversification means buying different securities across industries and asset classes for your portfolio. One may choose to purchase equities in companies that are in the health sector, financial sector or telecoms sector. Examples of these would be Johnson and Johnson (NYSE:JNJ), JP Morgan Chase & Co (JPM) or AT&T Company (NYSE:T), respectively. This can protect the investor against sharp downturns in the market, whether it is linked to the company or the industry the company is in.

This becomes extremely important for larger sums being invested, as price fluctuation greatly increases or decreases the original sum invested. You should invest in accordance with where you are in your investment cycle – taking into account your age and your reasons for investing.

A bad experience from previous investments can be a strong deterrent to reinvesting. Putting a large allocation into a financial instrument and then seeing the price for that instrument plummet is a bitter pill to swallow.

Generally, younger investors take on more risk as they are seeking to create wealth and as such will chase high returns. If they do lose money, they have a longer investment cycle to recover the losses.

For investors closer to retirement, the assumption can be made that capital preservation is one of the primary objectives when investing. These investors are more risk-averse in comparison – they are considered conservative investors. A loss in their portfolio has a more far-reaching effect as they have less time to recover these funds.

With this in mind, when investing one should always ensure that the company has strong financial fundamentals. Without due diligence one runs the risk of putting too large a sum into a risky asset, which can result in major losses.

This experience will prevent investors from reentering the market, as they will be turned off the process entirely. With the help of a financial advisor, one can research the financials of any company or government (in the case of bonds) to see the risk/reward ratio of investing in the security being offered.

Generally speaking, you should invest in securities that you would buy more of if the price falls. These companies are best of breed, have a broad economic moat and a large market share in their respective industries.

Fear of losing money, the experience of having lost money and lack of information are some of the common fears of investors.

The journey of a thousand miles begins with the first step. With the help of a financial advisor and adequate research, these fears can be conquered and you can be on your way to financial freedom.

Shannon Harris is a Private Wealth Associate at Stocks & Securities Ltd.