Let’s Be Friends with Fear in New Year 2023

New year 2023

Psychology of Money is a Wonderful book by Morgan Housel and is a Must Read by all New and old Investors.My Today’s article is inspired from one of its Chapters which was recently shared by the author in his weekly emails with title – Getting Wealthy Vs Staying Wealthy. And I think this is a Perfect learning to start with New Year 2023

Let me start by taking the excerpts from the article:

Good Investing is Not Necessarily about making Good decisions. It’s about consistently not screwing up.

There are millions of ways to get wealthy, and plenty of books on how to do so. But there’s only one way to Stay Wealthy : some combination of frugality and paranoia.

Getting Money is One thing…Keeping it is another

If I had to summarize the money success in single word , it would be “Survival”

(Also Read: Art of Being Good with Money- Book by Manikaran Singal)

You must be thinking why an Investment adviser who is expected to make investors thrive with their money is sharing such statements. If the question is only about survival then why do you need an advisor or even why does anyone do investments at all..…as in what’s the point? 

Well, the point is you can thrive only, when, and if you Survive.

A good advisor’s Job is to help you Survive for long, and keep you guiding and coaching on various life and economic events, so you should not ruin your financial life. And if you keep saving and Investing for long then surely compounding helps you multiply your wealth. (Read: How to Evaluate your Financial Planner?)

There will be many instances where you get lured towards High Returns, and you may not be able to see the risks. 

You may get attracted towards low interest loans and exotic new products. 

Sometimes, You may get over confident of your “Own Research” etc…especially when everything is going well on the career front and income is good. At such times the external situations may appear rosier than they actually are, and overcoming oncoming obstacles might be imagined to be very easy.

But a long life ahead can’t be planned by looking at the next 2-3 years or even the past few years.

As the saying goes, Plan for the best but be prepared for the worst. And Good Plans always have accounted for the worst. 

To earn money, you have to take risks, be optimistic, and put yourself out there. It requires both skill and luck. (Read: Luck or Skill- What matters most in financial Success?)

However, keeping money requires the opposite of taking risks. You must be humble and fearful that what you have built can be taken away just as quickly. The key is to accept that some of your success is due to luck, so you can’t rely on past success to continue.

Fear generally is construed as a negative word. But being fearful has many benefits too. Fear acts as an internal danger alarm. It compels you to action and helps you make wise and prudent decisions.

For example, Fear of losing something

  • Fear of Losing Income will push you to keep yourself updated and upgrade your knowledge and skills, to remain meaningful in your Job
  • Fear of Losing Health pushes you to work towards your Body and Mind. Remember, in the recent past, the fear of getting caught with contagious disease made you work on your Hygiene.
  • Fear of losing business pushes you to keep Prospecting. 

But also remember, that excess of everything is Bad and Excessive fear results in Phobia /Panic, which may require Medical Intervention. Yet, excessive fear never lets you act on something you are fearful of, like investing in equity is good but you may not like to invest in volatile times.

In Investing, Fear of Losing Money keeps you diversified and well allocated in different Investment Assets. Still, in good times of Health, Work, Investments…you get over optimistic of the future, surrender yourself to Fads (Cryptos, AIFs etc.) and the definition of risk changes for you. You no longer fear and end up ruining all that you have, which further requires many more years to recoup from that loss.

So What’s the Solution?

Like Morgan says – A barbelled personality – optimistic about the future, but paranoid about what will prevent you from getting to the future – is vital.

New year 2023 - Lets be friends with fear

Fear should encourage you to be cautious in your assumptions and estimates, while writing and working on the Financial Plan.

It’s like keeping a Margin of Safety ( Room for error). The Margin of Safety is what increases your chances of survival at a given Level of Risk.

As in, even if the sellers and news around may say/show you that the past (long term) has generated 15% CAGR , you should be cautious here and keep the Margin of Safety. 

Do your Maths with 12% and not 15%, or to be on a much safer side work out a Plan with 10% return. It would be Great, if you get 15% but if it gives you 10% then it should not bother your Goals.

Some other areas in your Financial plan where you can keep the margin of safety

  1. Keep and maintain a high Emergency fund. If you were told for 3 months keep it for 6, if for 6 keep it for 9 or 12. Depending on your personal circumstances, the amount of emergency fund may be very different from what the Thumb Rule suggests.
  2. Buy Insurance covers for more than the Required minimum.
  3. Assume your life expectancy for Retirement corpus calculations to be more than what you feel. You never want to outlive your money and also no one knows how long you may live.
  4. Have a Properly Written WILL today, even if you think that you are Immortal and relations are amicable.
  5. Have a Core and Satellite Portfolio in place where the Core belongs to Goals and Invested as per Risk Profiling and Asset Allocation approach. Satellites may be invested in high risk instruments if you like. Never Mix both even if you feel that you know better than “Experienced and Professional Fund Managers”.


Financial Planning exercise does not ensure success, but it gives you direction, shows you a broader picture of your financial situation and prepares you with your expectations, understanding of risks to stick for long. 

In the context of this article, a Good Financial Plan keeps your Fear and Greed in control.

If planned well, it takes into account the uncertainties and prepares you well to handle financial emergencies , lets you buy required insurance coverages, makes you follow Asset Allocation by keeping the necessary Liquidity at place, Keeps you away from debt or helps you manage it well…and all this will help you stay financially sound for your lifetime, which makes all the difference. 

Long staying Power pays well and this applies to all spheres of life, be it career or business. 

And if you really are a Long term player, you need to keep your fear in check and also be friends with the same.

Wish you all the Happiness and Success in New Year 2023


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