The Financial Markets Are No Longer in the 90s: How to Overcome the Fear of Starting to Invest?
According to various surveys, the most common reasons for not investing are a lack of knowledge, fear, or previous disappointments. While unpleasant experiences have indeed shaped the attitudes of Lithuanians towards investing, experts point out that financial markets are now more mature, accessible, and strictly regulated than ever, and overcoming fear can be achieved through more active learning.
Lithuanians tend to save but not invest. This is the general conclusion drawn from the annual household surveys conducted by the Bank of Lithuania. According to the latest data, the most popular savings and investment tools among Lithuanians remain bank accounts (65%) and cash savings (55%). About 15% of Lithuanians had invested in pension funds and life insurance, about 5% directly in real estate (RE), and only a small percentage—far below the EU average—had invested in mutual funds, stocks, or debt securities.
Interestingly, Lithuanians consider real estate (62%) and stocks (10%) to be the most attractive investments, yet ten times fewer people actually invest in these tools. Conversely, only 5% of people consider deposits to be an attractive investment, but it is one of the most popular financial instruments in Lithuania.
According to investor and independent financial expert Jekaterina Govina, who was previously a financial market supervisor at the Bank of Lithuania, this behavior among Lithuanians may be due to a combination of cultural and historical reasons: lack of financial knowledge and skills, fear of losing money, and various significant events – such as the collapse of ruble-denominated savings, financial pyramids in the 1990s, bank failures, fraud, and financial products that failed to meet expectations.
"Even if people hear about stocks, funds, and other tools, they don't use them due to a lack of knowledge or skills and fears. Therefore, people simply choose to keep their money in a bank account or deposits. It's paradoxical that investing has recently become easily accessible and convenient: there are platforms, apps, and digital brokers, but all this does not automatically increase knowledge or reduce fears – on the contrary, people get lost in the abundance of choices," says J. Govina.
However, she notes some positive signs. Although people have a cool attitude toward commercial banks themselves, trust in the entire banking system, or simply the ability to recover funds, is already high. This could be due to the increased market supervision after the 2008-2009 crisis, higher requirements for banks, and government deposit insurance.
J. Govina is echoed by Greta Zarembiene, Head of Investor Relations at the crowdfunding real estate platform "Röntgen". In her view, the technical and legal opportunities to invest in Lithuania are indeed the best in history today, with significant educational work being done by both state institutions and commercial organizations. However, gaining trust and knowledge will still require individual effort and interest.
"A lack of interest leads to myths that further discourage investment. For example, many people think that investing requires a large amount of capital. But in fact, thanks to financial technology, you can now start investing with very small amounts – even as little as one euro on commercial bank apps or 100 EUR on crowdfunding platforms. Then, people mistakenly think that small amounts won't bring significant returns. Investing is certainly not a lottery, but with the habit of investing, significant results can be achieved over time even with conservative tools or amounts," says G. Zarembiene.
Why and How to Start
J. Govina herself has started investing relatively recently. She hasn't been a victim of fraud, but she does have individual positions in her portfolio that are currently unprofitable, which she considers a normal part of active investing. Still, investors should first ask themselves if they are psychologically comfortable with this.
"I often ask beginners if they can tolerate portfolio value fluctuations. If not, they should choose safer instruments with a fixed but usually lower return. Of course, diversification is necessary – through different funds, platforms, bonds, etc., although the mere fact of having multiple accounts or portfolios frightens some people. Nevertheless, you can try investing with a small amount in at least one selected tool – whether in a bank, platform, or other environment you trust. This will provide experience, courage, practical knowledge, and, ultimately, confidence," J. Govina suggests.
For those who are worried, G. Zarembiene recommends first answering questions about their financial goals and what beliefs prevent them from pursuing them. This can help avoid extremes: overly risky or overly conservative choices.
"Investing is not a way to get rich in a very short period. This desire is often accompanied by risks that many cannot tolerate, as we see in the cryptocurrency markets. But if the goal is to save for a large purchase, such as a down payment for a house, a car, or a vacation, and the main fear is losing money, one can choose investment instruments with security measures, such as real estate pledges. If there is fear of choosing the wrong instrument, you can consult several different professionals or try small amounts with different tools. Those who fear liquidity risk should choose short terms or look for favorable exit conditions. Understanding the causes of your fears makes it easier to make decisions," says G. Zarembiene.
If investors are worried about the reliability of a specific instrument, G. Zarembiene suggests checking whether it is supervised by the Bank of Lithuania and what the experiences and reviews of its existing users are. "Before starting, investors should personally communicate with the service provider, pay attention to their accessibility and communication. It's good practice to check this with other sources, ideally among acquaintances who have investment experience," says the "Röntgen" representative.
J. Govina believes that it is neither possible nor necessary to force everyone to independently manage their investment portfolio and actively follow the stock and bond markets. "However, self-study and, ultimately, trying out even the most conservative tools with the smallest possible amounts would be the most direct way to gain experience, overcome fears, and build confidence," says J. Govina.
It's Worth Consulting
Both experts also agree that efforts to improve financial literacy in schools, adult education programs, and from commercial market participants will never be too much in Lithuania. Moreover, it's important to discuss not only success stories but also painful experiences in the market.
"I think many people who are hesitant would be encouraged by objective, practical, sincere advice. I would also like to hear more everyday, practical stories, unsuccessful experiences from which one could learn. All this would help to reduce the still prevalent stereotype that investing is an activity only for an elite group," says J. Govina.
Nevertheless, the most realistic opportunity to hear objective experiences and advice from other investors remains within the circle of friends, acquaintances, and relatives. According to G. Zarembiene, most new investors on the "Röntgen" platform are brought in by recommendations, experiences, and advice from friends who already invest there. On the other hand, "Röntgen" statistics show that registered users can observe project offers and developments for a year or more, consult with acquaintances or professionals, and only then decide to start investing.
"Typically, those whose activities are not related to real estate or finance worry more. It may be difficult for them to independently assess the risks of a project. However, our platform is not only for beginners but also for large, professional, or institutional investors. The mere knowledge that professionals are investing in the same project can be a risk-reducing factor. Even better, if there is an opportunity to personally consult with a real investor—there are tens of thousands of them on the platforms in Lithuania, and we see that they are the main source of new users," says G. Zarembiene.
Therefore, for those hesitant to start investing or afraid of losses, she advises consulting with those who already do it, exploring the opportunities available in the market, weighing the offered investment protection measures, and trying to invest with a minimal amount. "For people seeking capital preservation and moderate growth, the key to success usually lies in a long-term approach, consistency, discipline, measured conservatism, interest, and diversification. And probably the only way to achieve this is to simply try: with small amounts, through several investment instruments, after consulting with those who know more. Nothing else will help overcome fears as much as practice, which inevitably increases knowledge," says G. Zarembiene.
In her opinion, fear is only a bad thing if it paralyzes a person. "Healthy fear can even help you focus, assess the situation, and encourage action. And only by acting—in this case, investing after doing your homework—can we ultimately overcome those fears," concludes G. Zarembiene.
The Financial Markets Are No Longer in the 90s: How to Overcome the Fear of Starting to Invest?
According to various surveys, the most common reasons for not investing are a lack of knowledge, fear, or previous disappointments. While unpleasant experiences have indeed shaped the attitudes of Lithuanians towards investing, experts point out that financial markets are now more mature, accessible, and strictly regulated than ever, and overcoming fear can be achieved through more active learning.
Lithuanians tend to save but not invest. This is the general conclusion drawn from the annual household surveys conducted by the Bank of Lithuania. According to the latest data, the most popular savings and investment tools among Lithuanians remain bank accounts (65%) and cash savings (55%). About 15% of Lithuanians had invested in pension funds and life insurance, about 5% directly in real estate (RE), and only a small percentage—far below the EU average—had invested in mutual funds, stocks, or debt securities.
Interestingly, Lithuanians consider real estate (62%) and stocks (10%) to be the most attractive investments, yet ten times fewer people actually invest in these tools. Conversely, only 5% of people consider deposits to be an attractive investment, but it is one of the most popular financial instruments in Lithuania.
According to investor and independent financial expert Jekaterina Govina, who was previously a financial market supervisor at the Bank of Lithuania, this behavior among Lithuanians may be due to a combination of cultural and historical reasons: lack of financial knowledge and skills, fear of losing money, and various significant events – such as the collapse of ruble-denominated savings, financial pyramids in the 1990s, bank failures, fraud, and financial products that failed to meet expectations.
"Even if people hear about stocks, funds, and other tools, they don't use them due to a lack of knowledge or skills and fears. Therefore, people simply choose to keep their money in a bank account or deposits. It's paradoxical that investing has recently become easily accessible and convenient: there are platforms, apps, and digital brokers, but all this does not automatically increase knowledge or reduce fears – on the contrary, people get lost in the abundance of choices," says J. Govina.
However, she notes some positive signs. Although people have a cool attitude toward commercial banks themselves, trust in the entire banking system, or simply the ability to recover funds, is already high. This could be due to the increased market supervision after the 2008-2009 crisis, higher requirements for banks, and government deposit insurance.
J. Govina is echoed by Greta Zarembiene, Head of Investor Relations at the crowdfunding real estate platform "Röntgen". In her view, the technical and legal opportunities to invest in Lithuania are indeed the best in history today, with significant educational work being done by both state institutions and commercial organizations. However, gaining trust and knowledge will still require individual effort and interest.
"A lack of interest leads to myths that further discourage investment. For example, many people think that investing requires a large amount of capital. But in fact, thanks to financial technology, you can now start investing with very small amounts – even as little as one euro on commercial bank apps or 100 EUR on crowdfunding platforms. Then, people mistakenly think that small amounts won't bring significant returns. Investing is certainly not a lottery, but with the habit of investing, significant results can be achieved over time even with conservative tools or amounts," says G. Zarembiene.
Why and How to Start
J. Govina herself has started investing relatively recently. She hasn't been a victim of fraud, but she does have individual positions in her portfolio that are currently unprofitable, which she considers a normal part of active investing. Still, investors should first ask themselves if they are psychologically comfortable with this.
"I often ask beginners if they can tolerate portfolio value fluctuations. If not, they should choose safer instruments with a fixed but usually lower return. Of course, diversification is necessary – through different funds, platforms, bonds, etc., although the mere fact of having multiple accounts or portfolios frightens some people. Nevertheless, you can try investing with a small amount in at least one selected tool – whether in a bank, platform, or other environment you trust. This will provide experience, courage, practical knowledge, and, ultimately, confidence," J. Govina suggests.
For those who are worried, G. Zarembiene recommends first answering questions about their financial goals and what beliefs prevent them from pursuing them. This can help avoid extremes: overly risky or overly conservative choices.
"Investing is not a way to get rich in a very short period. This desire is often accompanied by risks that many cannot tolerate, as we see in the cryptocurrency markets. But if the goal is to save for a large purchase, such as a down payment for a house, a car, or a vacation, and the main fear is losing money, one can choose investment instruments with security measures, such as real estate pledges. If there is fear of choosing the wrong instrument, you can consult several different professionals or try small amounts with different tools. Those who fear liquidity risk should choose short terms or look for favorable exit conditions. Understanding the causes of your fears makes it easier to make decisions," says G. Zarembiene.
If investors are worried about the reliability of a specific instrument, G. Zarembiene suggests checking whether it is supervised by the Bank of Lithuania and what the experiences and reviews of its existing users are. "Before starting, investors should personally communicate with the service provider, pay attention to their accessibility and communication. It's good practice to check this with other sources, ideally among acquaintances who have investment experience," says the "Röntgen" representative.
J. Govina believes that it is neither possible nor necessary to force everyone to independently manage their investment portfolio and actively follow the stock and bond markets. "However, self-study and, ultimately, trying out even the most conservative tools with the smallest possible amounts would be the most direct way to gain experience, overcome fears, and build confidence," says J. Govina.
It's Worth Consulting
Both experts also agree that efforts to improve financial literacy in schools, adult education programs, and from commercial market participants will never be too much in Lithuania. Moreover, it's important to discuss not only success stories but also painful experiences in the market.
"I think many people who are hesitant would be encouraged by objective, practical, sincere advice. I would also like to hear more everyday, practical stories, unsuccessful experiences from which one could learn. All this would help to reduce the still prevalent stereotype that investing is an activity only for an elite group," says J. Govina.
Nevertheless, the most realistic opportunity to hear objective experiences and advice from other investors remains within the circle of friends, acquaintances, and relatives. According to G. Zarembiene, most new investors on the "Röntgen" platform are brought in by recommendations, experiences, and advice from friends who already invest there. On the other hand, "Röntgen" statistics show that registered users can observe project offers and developments for a year or more, consult with acquaintances or professionals, and only then decide to start investing.
"Typically, those whose activities are not related to real estate or finance worry more. It may be difficult for them to independently assess the risks of a project. However, our platform is not only for beginners but also for large, professional, or institutional investors. The mere knowledge that professionals are investing in the same project can be a risk-reducing factor. Even better, if there is an opportunity to personally consult with a real investor—there are tens of thousands of them on the platforms in Lithuania, and we see that they are the main source of new users," says G. Zarembiene.
Therefore, for those hesitant to start investing or afraid of losses, she advises consulting with those who already do it, exploring the opportunities available in the market, weighing the offered investment protection measures, and trying to invest with a minimal amount. "For people seeking capital preservation and moderate growth, the key to success usually lies in a long-term approach, consistency, discipline, measured conservatism, interest, and diversification. And probably the only way to achieve this is to simply try: with small amounts, through several investment instruments, after consulting with those who know more. Nothing else will help overcome fears as much as practice, which inevitably increases knowledge," says G. Zarembiene.
In her opinion, fear is only a bad thing if it paralyzes a person. "Healthy fear can even help you focus, assess the situation, and encourage action. And only by acting—in this case, investing after doing your homework—can we ultimately overcome those fears," concludes G. Zarembiene.
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