Investing: Self-confidence paradox

If you read my previous newsletters you are aware of my opinions that Investing is not about knowledge and that Sports and finances are surprisingly similar. Today, I'll explore the complex connection between self-confidence and investing and share useful techniques to improve your financial confidence drawing parallels from the research and evidence on the role of self-confidence in sports.

Self-confidence is believing in your ability to handle tough situations and succeed. It's natural for our confidence levels to fluctuate and differ in various aspects of life. You might feel really confident at work, but then completely lose confidence when going on a date. In general, women tend to have lower levels of financial confidence than men which affect their financial decisions in general and their willingness to invest in particular.

What is the paradox?

Investing tends to have a profound impact on a person′s overall self-confidence. This boost in self-assurance translates into improved decision-making abilities for future financial endeavors and even spills into other areas of life. From the other side, a considerably amount of financial self-confidence is required to make a decision to start investing.

Investing can boost our self-confidence, yet having self-confidence is essential to begin investing in the first place.

Can Investing Transform Our Self-Confidence?

Many of my students choose to make their first investment in my virtual presence: the student shares their screen on Zoom, pushing the "Buy" button to purchase their first ETF. I usually make the same joke: "You are no longer an 'investing virgin'." We laugh and celebrate.

I love this moment! Not just because of the joy it brings, but because today I understand the profound impact that making that first investment can have on my student′s overall self-confidence. I have witnessed it before and I know that from now on this person will not shy away from having financial conversations. I know that this person will feel empowered to ask for a raise or ask questions when dealing with a bank. This person will feel strong to consider purchasing a property for additional income or postponing a house purchase to avoid excessive debt.

But it doesn't stop there!

This newfound confidence often affects other areas of their lives. In fact, I even heard that it gave one student more motivation to exercise and change her eating habits to lose weight.

But how do you start investing if you are lacking financial self-confidence in the first place?

Numerous studies confirm how self-confidence boosts performance in sports. In fact, athletes and coaches alike employ various strategies to cultivate and amplify self-assurance, yielding superior results on the field.

Here are 5 simple techniques you can apply to grow your financial self-confidence to support your investing journey:

1.??? In the beginning collect small personal financial successes instead of aiming for big ambitious goals:

Each small victory breeds confidence, serving as a stepping stone to conquer more significant challenges. By gradually mastering financial management tasks—whether renegotiating bank fees, organizing financial data, or evaluating pension plans—you cultivate a sense of financial competence.

Embrace manageable tasks to avoid overwhelm and sustain momentum and avoid initiating big ambitious financial projects which you are unlikely to finish over foreseeable future.

2.??? Look for inspiration from others' success:

Being involved with the success of others can significantly bolster your confidence. Can you find a role model from your friends or aquiantces? If not, consider attending events or joining communities where you can meet women who have successfully started investing.

3.??? Use verbal and mental persuasion. Pay attention to the behavior of coaches before and during a tournament. You will notice how they try to boost confidence by convincing athletes that the challenges ahead are within their capabilities. Make sure you are your best personal coach.

Replace negative self-talk with positive affirmations. In stead of saying "I am horrible with finances", say "I am learning and making progress".

4.?Imagery experiences. I personally use this technique to fight my stage fright. Imagining myself successfully performing in front of the audience or reliving my successful past performances help me suppress the fear. Imagining yourself enjoying the freedom granted by your investing success may help you get past your fear.

5. Accept and manage your emotions. Money and finances may bring out negative emotions that we didn't even know existed. Personally, I've seen business professionals forget all their skills and reasoning when attempting to work on their personal finances. Our brains perceive investing as a highly risky activity and instinctively come up with numerous excuses to avoid it altogether.

Observing our emotional states before and during working on our finances, and purposely using techniques to manage our emotions, will help us build self-confidence and navigate financial decisions with clarity and composure.

The journey of investing is not just about numbers; it's about belief in oneself and the ability to navigate challenges with confidence.

Not investing tops the list of financial regrets for 41% of women. My newsletter is a way to make a change to this statistic.

I am Lena, the founder of “Women Investors Club”.