What’s the worst that could happen?

When it comes to setting yourself up for a successful retirement, one of the biggest obstacles in your path is fear.  Fear creeps into many areas of our lives, potentially paralyzing us so we can’t make rational financial decisions.  Think about common arguments that focus on fear, and then think about how much money is lost giving into these fears.  How many people do you know that buy the largest SUV they can because they fear they’d be killed in an accident if they drove a smaller car?  In 2011, the chance of a driver of a mini car dying per million miles driven was 0.0065%, compared to 0.0053% of drivers of large pickup trucks.  To put that into perspective, you have a 0.14% chance of dying from just crossing the street.


A midsize sedan driver has a 0.0034% chance of dying behind the wheel.  Compare the cost difference between a Honda Accord Hybrid and a Ford F150.  A nicely loaded Ford F150 runs $42k, and gets 16.6 MPG in real world driving.  A nicely loaded Honda Accord Hybrid runs around $33k and gets 40 MPG in real world driving.  Over 100,000 miles, you’re talking about a total difference of $17,105 if gas is $2.30 a gallon, and $21,334 if gas is $3.50 a gallon.  It’s one thing if folks actually needed the hauling capacity of SUVs and trucks, but how often are they just hauling around air?  How much is peace of mind worth that you won’t get stuck in the snow, despite the fact that many people stay home when there’s even a rumor of snow?

If you let fear and what-ifs control your financial decisions, you’ll have let fear plan your retirement too.  If you spring for a large new vehicle every 10 years, (figure at ages 27, 37, 47, and 57), you could have $520,217.74 less saved for retirement if gas is $2.30 a gallon, and $648,835.15 less saved if gas is $3.50 a gallon (assuming the usual 7% return).  This assumes you pay cash for your vehicles; the numbers are even higher if you finance your vehicles.  Which is more likely, you’ll die in a car accident, or not have enough money saved for retirement?

Another fear people have is of someone breaking into their house.  The average amount stolen during a break-in is $2,185.  The average monthly cost for a monitored alarm system is $30.  Your best bet is an alarm system that sounds locally, avoiding the monthly expense of a monitoring service, yet deterring someone who breaks into your house from venturing in past the door or window.  That $30 monitoring fee adds up fast.  If you invested that $30 monthly fee from age 27 to 67, you’d have an extra $82,667.61 at retirement.  That’s not too far from the average 401(k) balance of $91,800.

What is probably our biggest fear though is the fear of making the wrong investing decisions.  If you’re too afraid that you will pick the wrong account type, invest in the wrong funds, tie up money that you may need tomorrow, or afraid the market will collapse, you might never see a secure retirement.


What’s the best way to proceed?  Face your fears head-on, and ask yourself, what’s the worst that can happen?  If you pick the wrong investment type, are you really hurting yourself more than taking no action at all?  You’re much better off investing in a Roth IRA or a Traditional IRA rather than no IRA at all.  Start off with what you know and understand, and then as you gain more knowledge, adjust your future investment decisions.

If you buy the wrong fund, you can always sell it for something else, but why not start off with something simple, like an S&P 500 index fund?  As you learn more about the other fund types available, feel free to diversify, but sometimes simple is best.

If you’re not sure about how much money you have to invest, start small.  Open up an account that allows you to invest $20.  Did you miss that amount?  Raise it to $50 next month.  Still able to pay the bills?  Aim for $100 the next month.  Keep on raising the amount as much as you can.  No one saves a million dollars overnight, but if you invested $15 a day you could have a million in less than 40 years.

The last fear that causes more problems for people than any other is fear of a market collapse.  The general way to make money from investing is to buy low and sell high.  This means you pay $10 for a share of a stock today, and sell it for $20 in 5 years.  If you buy $100 worth of a stock at $10 a share, you have 10 shares.  When the market goes down, and it will go down, you don’t need to panic.  If you’ve invested in an index fund, even if the price goes from $10 a share to $1 a share, you haven’t lost anything until you actually sell.  You still have the same 10 shares.


In fact, when the market collapses, you have an excellent opportunity to ensure you’re buying low.  When that stock goes from $10 to $1, you now only have to spend $10 to buy 10 shares, instead of $100.

Look at what happened during the last market crash.  The Dow lost 54% of its value.  If you sold your 10 shares of a DJIA index fund you paid $10 each for, and assuming you bought those shares when the market was at its peak in 2007, you’d have lost $54.  If you sold them today, you’d have gained $21, which is a difference of $75.

Add a few zeros to those numbers, and imagine it’s a Roth IRA with a balance of $100,000. Would you rather lose $54,000 from fear, or gain $21,000 by realizing the market goes up and it goes down.  Your neighbor who panicked might have $75,000 less than you do by selling when things looked bleak, $46,000 versus $121,000.  This isn’t hypothetical, a lot of people pulled their money out of the market and lost a fortune when it crashed, and then lost out again when the market took off again but they had their money on the sidelines.  By ignoring your fear of losing everything when the market goes down, you come out on top.


Fear is a powerful demotivator.  Recognize your fears and ask yourself what’s the worst that can happen.  When you follow that thought all the way down the rabbit hole, you might realize things wouldn’t be as bad as you thought.  What’s the worst that can happen if you invest in the market?  You lose all of your money.  So now what, you have to work longer?  You have to live only on social security?  Now ask yourself what’s the worst that can happen by not saving for retirement. Seems like the same things.  Finally, ask yourself how likely it is for each scenario to occur.  If you do nothing, your worst fears my actually come true.

If you have any questions or comments, you can reach out below or continue the discussion in the forum.  If you are interested in receiving a notification of new posts, you can subscribe here.


  1. The advice is very generic and not necessarily correct. What if the fear I have is simply that I can’t time the market?

    I decide to just go for it and say what’s the worst that could happen…next time I think I see a real correction, bear, or crash coming, I’m going to go for it.

    I could definitely lose out this way. I could also win, but fear might have been a good thing in this case to keep me from losing.


    1. Many people have that fear, that they can’t time the market. But they shouldn’t let it bother them, because they can’t! If you’re investing for retirement, most folks would agree a sensible approach is to invest in low-cost index funds. Over any 30 year period since it was created, someone investing in the S&P 500 for retirement would never have seen a return less than 8.11%. http://retirementrocketscience.com/slow-and-steady-wins-the-retirement-race/. That’s a pretty solid return, and is gained by not trying to time the market.

      This is one reason why “past performance is not an indicator of future results” is plastered everywhere, because we can’t predict what will happen next. There’s not much of a point in trying, especially if we’re saving for retirement. If the financial pros can’t consistently beat the market, what chance do we have of doing it? Statistics show that you will have a higher balance at retirement by not timing the market by using dollar cost averaging. For every bear you think you’ll avoid, you also miss the bull.

      When you see that real correction, bear, or crash coming, keep saving. When you’re living through that bear, keep saving. This is one way you can buy low and sell high; by investing when things are bad. Warren Buffet famously said “be fearful when others are greedy, and greedy when others are fearful.” People panic when things are looking bad, not when they look rosy. If people are fearing a crash, that’s when he gets greedy and invests more. This strategy hasn’t worked too badly for him.

      Thank you for your comment and feedback, and welcome to the site.


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