The Good and Bad of Fear

Human emotions can be good or bad depending on how we respond to them. A very useful emotion is fear. Though unpleasant, fear causes us to be extra cautious and to consider our options for escape if necessary. Fear helps us survive but only if balanced by good judgement.

I was in a bank when an elderly gentleman asked for the manager. The ensuing conversation displayed his deep concerns for current world events. He told of investments he had with the banks’ advisory arm, as well as his cash savings accounts. He then surprisingly asked the manager what it would take to liquidate his holdings, and what his options might be for removing all his money in cash from the bank. His very consideration of taking such extreme financial actions revealed a high level of fear. At the same time, I found the manager’s somewhat dismissive answers, along with a willingness to continue such a serious and personal conversation in an open lobby showed a lack of appreciation for the mans’ real fears.

In business school they teach you to take seriously all customer concerns. For every person who complains, there are countless more who feel the same way but remain silent. As I listened to this one man express deep fears about his financial health, I knew he represented the fears of many others. Fear is a powerful force with often very negative results in an individuals’ financial decisions. His concerns deserved a more serious response.

Todays’ world is in a heightened state of fear. It should not be taken lightly that some are worried enough to consider walking out of the bank with their life’s savings in a brown paper bag as a viable option. How we respond to this fear will shape all our futures. From a financial perspective here is the advice I would have given, in private, to this man.

First: Recognize what we can control and what we can’t and focus on the first. I grew up during the Vietnam war and no matter how much I worried about the prospects of one day being drafted into it, there was nothing I could do about it, so the worry served no useful purpose.

Second: Stick with the basics of personal financial management. Evaluate debt levels to determine if they are reasonable. Review budgets for unnecessary spending or waste and continue to work and be productive based on your situation in life.

Step three: Review current investments in light of world conditions. Consider being more defensive by reducing exposure to risk including anything tied to Russia or other authoritarian regimes while avoiding the temptation to make dramatic changes.

Step four: Allow yourself to continue enjoying life. Fear can help you re-evaluate your risks, but do not allow it to paralyze you.

Another bit of advice would be to avoid more news than necessary to be properly informed. Spending too much time obsessing over the fearful news cycle can have a negative impact on our quality of life, and the lives of those around us.