Gallio Letter: Overcoming the Fear of Investing
Your fear of losing money is real and valid. But the cost of inaction might be higher than the cost of volatility.
Overcoming the Fear of Investing
Key Takeaways
- Loss aversion is wired into us, but inflation (the silent erosion of your savings) is guaranteed, while market downturns historically recover.
- The S&P 500 has never had a negative 20-year rolling return since 1926, despite crashes, recessions, and pandemics.
- Start small with boring index funds, automate your investing, and check less often. Fear usually fades once you see how it actually works.
Where Fear Comes From
Being scared to invest is completely normal. This is your money, probably accumulated through years of work. The thought of it losing value is genuinely frightening.
Humans are wired with something called loss aversion. Losing €100 hurts roughly twice as much as gaining €100 feels good. That’s not a character flaw. It’s evolutionary. It kept our ancestors careful with resources.
But media amplifies it. Every market dip becomes breaking news. Every crash gets covered like a disaster. The quiet, steady gains that make up most of investing don’t get headlines. It all creates an impression that the market is riskier than it actually is.
Then there’s complexity. Jargon, hidden traps, not knowing where to start. Confusion feeds fear. When something feels confusing and risky, it’s natural to avoid it.
The Hidden Cost of Safety
A savings account feels safe. You see your balance. Nothing can go wrong.
But at typical savings interest rates, you’re losing purchasing power every year to inflation. At 3% inflation, €10,000 today buys what €5,500 will buy in 20 years. Your balance didn’t shrink. What you can actually buy with it did.
That’s a guaranteed loss. Not risky. Certain.
Stock markets have historically returned 7-10% annually over long periods. Yes, with volatility. Yes, with scary drops. But also with real growth that compounds far faster than inflation.
The cost of staying on the sidelines compounds too. Every year you wait is a year without growth. Every year is compound interest you’ll never get back.
Here’s the historical pattern: the S&P 500 has never had a negative 20-year rolling return since 1926. Through the Great Depression, world wars, recessions, pandemics, you name it. Crashes happened. Recoveries happened. Patient investors who held through it all came out ahead.
That’s not a guarantee about the future. But it’s a strong pattern. And it suggests that doing nothing has hidden costs too.
How to Start When You’re Scared
Start absurdly tiny. €50 or €100. The goal isn’t to maximize returns. It’s to get comfortable with the reality of investing.
Go boring. One diversified index fund. No stock picking, no complexity. Just buy the market. An S&P 500 ETF means you own pieces of 500 companies. One bad investment can’t sink you.
Automate. Set up monthly auto-investments. No decision required. No fear intervening at the wrong moment.
Look less often. Checking daily creates anxiety. You’ll see down days and feel that loss aversion kicking in. Monthly or quarterly is enough. You’re investing for years. Daily moves don’t matter.
Focus on what you control. You can’t control returns. You can’t control whether the market rises or falls tomorrow. You can control how much you invest and how long you hold. That’s where your power is.
Rethinking What Risk Actually Means
Most people confuse volatility with risk. A 20% drop that recovers isn’t a loss. It’s a temporary move. A loss is selling in a panic or never investing at all.
With time and diversification, permanent loss has historically been rare. Markets have recovered from every crash. Yes, that’s past performance, not a guarantee. But it’s the pattern.
The real question becomes: which risk would you rather take? Inflation silently eating your savings (quiet, certain, guaranteed to happen) or market volatility (loud, sometimes scary, but historically temporary)?
One is easy to ignore. One is easy to see. Humans worry about the visible one while tolerating the invisible one.
If It Still Feels Too Scary
That’s okay. Not everyone needs 100% stocks. There are middle grounds.
Try 20% stocks and 80% bonds or savings. You capture some growth from stocks while limiting the downside swings. As you get comfortable watching the volatility, you can gradually increase the stock portion.
Slow progress beats no progress. You might think you need to go all-in immediately. You don’t. Many successful investors started conservatively and became more aggressive over time as they built confidence.
Opening an account with a small amount can help too. The fear often fades once you see how it actually works. You’ll realize market drops don’t touch your principal. You’ll see a dip followed by a recovery. You’ll get comfortable with the rhythm.
You can use Gallio to set up your investment goal once you open an account, then watch your regular contributions work toward it. Seeing progress toward your actual goal (retirement, financial independence, whatever it is) makes the volatility feel less like gambling and more like progress.
The fear is valid. But staying on the sidelines costs you. Start small, go boring, automate, and give yourself permission to be conservative if that’s what it takes to actually start. Once you begin, the fear usually gets smaller.
Gallio replaces the anxiety of constant checking with calm, goal-based tracking. See your progress toward what matters, not the daily noise that feeds the fear.
Overcoming the Fear of Investing
Key Takeaways
- Loss aversion is wired into us, but inflation (the silent erosion of your savings) is guaranteed, while market downturns historically recover.
- The S&P 500 has never had a negative 20-year rolling return since 1926, despite crashes, recessions, and pandemics.
- Start small with boring index funds, automate your investing, and check less often. Fear usually fades once you see how it actually works.
Where Fear Comes From
Being scared to invest is completely normal. This is your money, probably accumulated through years of work. The thought of it losing value is genuinely frightening.
Humans are wired with something called loss aversion. Losing €100 hurts roughly twice as much as gaining €100 feels good. That’s not a character flaw. It’s evolutionary. It kept our ancestors careful with resources.
But media amplifies it. Every market dip becomes breaking news. Every crash gets covered like a disaster. The quiet, steady gains that make up most of investing don’t get headlines. It all creates an impression that the market is riskier than it actually is.
Then there’s complexity. Jargon, hidden traps, not knowing where to start. Confusion feeds fear. When something feels confusing and risky, it’s natural to avoid it.
The Hidden Cost of Safety
A savings account feels safe. You see your balance. Nothing can go wrong.
But at typical savings interest rates, you’re losing purchasing power every year to inflation. At 3% inflation, €10,000 today buys what €5,500 will buy in 20 years. Your balance didn’t shrink. What you can actually buy with it did.
That’s a guaranteed loss. Not risky. Certain.
Stock markets have historically returned 7-10% annually over long periods. Yes, with volatility. Yes, with scary drops. But also with real growth that compounds far faster than inflation.
The cost of staying on the sidelines compounds too. Every year you wait is a year without growth. Every year is compound interest you’ll never get back.
Here’s the historical pattern: the S&P 500 has never had a negative 20-year rolling return since 1926. Through the Great Depression, world wars, recessions, pandemics, you name it. Crashes happened. Recoveries happened. Patient investors who held through it all came out ahead.
That’s not a guarantee about the future. But it’s a strong pattern. And it suggests that doing nothing has hidden costs too.
How to Start When You’re Scared
Start absurdly tiny. €50 or €100. The goal isn’t to maximize returns. It’s to get comfortable with the reality of investing.
Go boring. One diversified index fund. No stock picking, no complexity. Just buy the market. An S&P 500 ETF means you own pieces of 500 companies. One bad investment can’t sink you.
Automate. Set up monthly auto-investments. No decision required. No fear intervening at the wrong moment.
Look less often. Checking daily creates anxiety. You’ll see down days and feel that loss aversion kicking in. Monthly or quarterly is enough. You’re investing for years. Daily moves don’t matter.
Focus on what you control. You can’t control returns. You can’t control whether the market rises or falls tomorrow. You can control how much you invest and how long you hold. That’s where your power is.
Rethinking What Risk Actually Means
Most people confuse volatility with risk. A 20% drop that recovers isn’t a loss. It’s a temporary move. A loss is selling in a panic or never investing at all.
With time and diversification, permanent loss has historically been rare. Markets have recovered from every crash. Yes, that’s past performance, not a guarantee. But it’s the pattern.
The real question becomes: which risk would you rather take? Inflation silently eating your savings (quiet, certain, guaranteed to happen) or market volatility (loud, sometimes scary, but historically temporary)?
One is easy to ignore. One is easy to see. Humans worry about the visible one while tolerating the invisible one.
If It Still Feels Too Scary
That’s okay. Not everyone needs 100% stocks. There are middle grounds.
Try 20% stocks and 80% bonds or savings. You capture some growth from stocks while limiting the downside swings. As you get comfortable watching the volatility, you can gradually increase the stock portion.
Slow progress beats no progress. You might think you need to go all-in immediately. You don’t. Many successful investors started conservatively and became more aggressive over time as they built confidence.
Opening an account with a small amount can help too. The fear often fades once you see how it actually works. You’ll realize market drops don’t touch your principal. You’ll see a dip followed by a recovery. You’ll get comfortable with the rhythm.
You can use Gallio to set up your investment goal once you open an account, then watch your regular contributions work toward it. Seeing progress toward your actual goal (retirement, financial independence, whatever it is) makes the volatility feel less like gambling and more like progress.
The fear is valid. But staying on the sidelines costs you. Start small, go boring, automate, and give yourself permission to be conservative if that’s what it takes to actually start. Once you begin, the fear usually gets smaller.
Gallio replaces the anxiety of constant checking with calm, goal-based tracking. See your progress toward what matters, not the daily noise that feeds the fear.