Fear can blight investment

What holds you back? Do you look forward to your next bank statement landing in your letterbox or view it akin to a grenade being delivered?

If you're in the latter camp then it's likely you're money phobic. For some people financial phobias are so bad that they can never make an investment decision beyond putting their savings in the bank. Others are held back from making anything but the most conservative investment decisions.

Cambridge University academic Dr Brendan Burchell says those who struggle to manage their money aren't necessarily feckless or lazy.

"The most pronounced symptoms experienced by financialphobes are the emotional reactions encountered when faced with the prospect of managing money, including anxiety, resulting in an increased heartbeat, and feelings of physical illness."

More minor manifestations included handing responsibility for dealing with bank or credit card statements to partners, avoiding reconciling statements and ignoring bank balances. Extreme sufferers throw away unopened statements.

In her latest book Get Your Head Out of the $and, published this week, Auckland-based financial planner Lisa Dudson warns about the myths, fantasies and excuses that surround money. "While money-management skills can be quite easily learnt, attitudes and behaviours are often more difficult to tackle," she says.

Call them phobias, hang-ups, barriers or simply savings mistakes, here are some of the common things that hold investors back:

* Language barriers. Programming your brain with the wrong words is a common fault of those who don't succeed says author Robert Kiyosaki, author of the Rich Dad, Poor Dad series. The rich "invest" and the poor aspire to "save", he says. Auckland-based property investment mentor Simon Shreeve, of Property Plus Consultancy, says: "If you start talking about struggling or surviving, what are you telling your brain?"

* Ostrich syndrome. The difference between the would-be investor and those well on the way to a comfortable retirement is that some people bury their heads in the sand.

* Too afraid to discuss money. We live in a culture where at best money is viewed as private, at worst vulgar. And some people just don't want to admit they're not successful financially. Avoiding the issue won't make it go away.

* Money fantasies. Do you believe that you're going to win the lottery, you'll get sudden success by inventing a gadget or widget or writing a bestseller, or you will start investing, just later? These, says Dudson, are typical money fantasies that hold us back.

* What ifs and buts disease. Also labelled "excusitis" by Dudson, this is about finding excuses not to invest. The most common excuses: I wasn't taught it at school or by my parents, I don't earn enough, my partner looks after the finances, I don't understand finances, I don't have enough time, I'm overwhelmed by information, I want to wait until I get my next pay rise or the kids go to school, I don't have the energy or I'm afraid of making a mistake.

* Crowd following. Have you ever noticed how your hairdresser, taxi driver, elderly aunt and just about everyone else piles into an investment such as technology stocks or investment properties just as the market in question hits the peak of its cycle? The answer to this is to research your market and make your own decisions. The crowd isn't always right.

* Missing the big picture. Without knowing exactly what you're worth and whether your investments are spread sensibly, it's difficult to allocate your finances to work for the future. Buying some financial software such as MSN Money or Quicken, or even setting up a spreadsheet to find out your financial net worth is an easy answer.

* Predisposed to panicking. Speak to financial planners or seasoned property investors and they'll tell you you'll need to be in the market for the long term. It's surprising how often investors panic and sell up as soon as the market starts dropping.

* Can't dump losers. Investors who buy shares on impulse often don't want to admit they've bought a lemon. Likewise many a novice investor has bought a property they fell in love with instead of one where the numbers stacked up. Smart investors sell and move on.

* Gambling. The buy and hold mentality simply doesn't sit with some people who are adrenaline junkies. Other gamblers are people who use investment instruments they don't have a lot of knowledge about, says Brighouse.

* Hot tip temptations. Anyone with an email inbox will know the scenario. An email arrives tipping a company with a product tipped to be the next big thing. If it's an unsolicited email then it's a scam and you'll almost certainly lose your money. But even hot tips from friends, relatives and workmates often turn out to be duds.

It's easy to blame parents or school for our money phobias, and the maths teacher for our bad investment decisions. Overcoming phobias happens one day at a time.

The first thing to do, says Shreeve, is to identify your money phobias then reprogramme your brain with new beliefs. For one client, being made redundant "was a negative experience ... I was telling him it was an opportunity". The client went on to become a property developer.

Littin teaches the same four-step plan to clients that range from chief executives to the children he is coaching at a school in Mt Roskill.

1. Have a definite purpose and you'll be ahead of 97 per cent of the population.

2. Form a plan of action.

3. Make friendly alliances with professionals such as accountants and mortgage brokers who can help you.

4. Be persistent and keep doing it.

Some people need more than just mentoring or coaching. Serious money phobias can require psychological help.

For a quick, fun assessment of just how phobic you are, visit the website financialphobias.co.uk. The site has a phobe-o-meter which poses a series of questions and then rates you on a scale of financial ostrich, hedgehog, sloth, squirrel and fox.

* Recommended reading: Get Your Head Out of the $and, By Lisa Dudson, published by Random House. Available from this week.

* Websites: www.financialphobias.co.uk www.behaviouralfinance.net