Financial Anxiety

Financial Anxiety
The Buddha teaches how to address greed, fear, and anxiety

I have told myself, and people have often told me: I just want to have enough money not to worry about money.

I found that worrying about money is more about worrying and less about money.

Why we worry

A lot of people worry about money. 

People without money worry about paying for necessities in the immediate future.

People with a little bit of money worry about that reserve being depleted.

People with a lot of money worry about losing it. Or investing it sub-optimally.

I was once talking to someone about their financial anxiety and they said wealthy people couldn’t understand financial anxiety.

I asked: “What would be worse than not having enough money?” – They replied: “Nothing.”

I asked: “What if you had enough money, and then lost it?" – They replied: “Maybe that would be worse.”

We worry because our brains are hardwired to worry. That little inner monologue: “Did you forget to pay your taxes? Did you lock the door? Did you reply to Susan’s email?” is the same inner voice that helped your ancestors survive, reproduce, and create you.

The problem is that the anxious inner voice does not help us be better at investing.

Letting go is a path to wealth

Those who let their anxiety around money rule their decision making are destined to make mistakes. 

When times are good they worry they’ll get outpaced by others, they get greedy and overconfident, they gamble more than they can afford to lose. 

When times are hard because asset prices are in decline they get shaken out. They sell at the bottom because the stress gets to them. 

Fidelity, a large US based asset manager, found that the best investors on their platform were the people who forgot they had an account. [0] 

Making good allocation decisions - and then HOLDING them - is the important and difficult path to being a great investor. 

The ability to hold investments through ups and downs requires equanimity - calmness and composure, especially in a difficult situation. 

Equanimity is the most underrated trait of a great investor. 


There are two ways to experience equanimity in markets. 

The rational approach

  1. Know that, if you have the right portfolio allocation setup, over the long run you will perform well. Your risky assets will keep pace with inflation or outperform it. Your low risk assets will buffer you in difficult times. (more on this in Allocating Capital: Fixed Income)
  2. Know that if asset prices decline when you invest more you’re buying assets at lower prices. If you’re not retired, every market decline is a gift - you’re buying more at lower prices. Future returns are now likely higher. If you are retired you can likely decrease your spending, temporarily, to buy more (or conserve) assets at these low prices. 

The deeper approach

The more advanced approach is to let go of anxiety and desire for control more generally. As an investor you’re not in control. You exercise control at the moment you buy and at the moment you sell. Most of the time you’re simply waiting for the passage of time to deliver the intended results. 

Rather than get shaken out of the market - or becoming overly greedy - simply watch those feelings arise and let them go.

This is simple advice and yet exceedingly difficult to do. Learning to live with a strong sense of equanimity is the goal of many different philosophical and spiritual practices - notably Stoicism and Buddhism.

My daughter climbing the stairs to see the large golden Buddha

Whether you have to tell yourself a rational story, or embrace a spiritual practice, you'll become a better investor by developing the ability to let go and surf the waves of the market - up and down.