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A couple of years ago, I was chatting with a friend about money. When it came to investing, he told me he would never touch the stock market again. Years earlier he had lost about $1,000, so now he was keeping everything in cash.

He was afraid of losing money again.

Fear is natural. Without it, we’d walk around with lions and probably not last long. But fear also has a sneaky way of keeping us stuck. It whispers: “Do nothing—it’s safer.”

The five basic fears we all share

Karl Albrecht described five root fears that shape much of our behavior. When you look at them through a financial lens, they suddenly make a lot of sense.

• Fear of Extinction → the fear of not existing anymore. Financially, it shows up as “If I invest, I’ll lose everything.” So people sit on piles of cash.

• Fear of Mutilation → the fear of injury or harm. That’s the sinking feeling when your portfolio drops. Panic selling is born here.

• Fear of Loss of Autonomy → the fear of being trapped. In money terms, it’s avoiding all debt—even the kind that could help build wealth—because it feels like a cage.

• Fear of Separation → the fear of rejection. That’s when people hide money problems from their partners or avoid difficult conversations.

• Fear of Ego Death → the fear of shame and humiliation. Financially, it’s refusing to admit a bad decision or avoiding new attempts because “what if I fail again?”

Of these, separation and ego death are the most dangerous with money. They’re invisible. No one can see that you’re avoiding a budget or refusing to invest again. In your head, you’re safe. But doing nothing is also a form of failure.

How I accidentally overcame one of my fears

As a kid, spiders terrified me. I’d literally freeze, hair standing on end, whenever one came close.

One day, some friends were playing with a big spider—moving it with sticks, feeding it flies. I stood back, but in that moment my fear of looking scared in front of them (ego death) was stronger than my fear of the spider (mutilation). So I grabbed a stick and joined in.

Weeks later, I realized spiders still disgusted me, but they no longer paralyzed me. I’d shrunk the fear by facing it.

“Do the thing you fear to do and keep on doing it… that is the quickest and surest way ever yet discovered to conquer fear.”
– Dale Carnegie

My friend who lost $1,000 never analyzed what happened. He didn’t ask what went wrong or how to avoid it in the future. He simply closed the door on investing. For years, his fear kept him on the sidelines. And the opportunities kept passing by.

That’s the real cost of fear.

A simple playbook to counter money fears

• Fear of Extinction → shows up as not investing at all, keeping everything in cash.
  Counter: start tiny, like $100/month into a diversified fund.

• Fear of Mutilation → shows up as panic when investments drop, selling in fear.
  Counter: decide your limits up front. For example, use a stop-loss at –10% or set rules before buying.

• Fear of Loss of Autonomy → shows up as avoiding all long-term debt because it feels like a trap.
  Counter: create guardrails. Keep housing payments ≤25% of income and hold at least 3 months of expenses in an emergency fund.

• Fear of Separation → shows up as hiding money problems or avoiding tough conversations.
  Counter: schedule a simple 30-minute money check-in with your partner on each payday.

• Fear of Ego Death → shows up as refusing to admit mistakes, staying silent, or avoiding new attempts.
  Counter: write a quick 3-line post-mortem after every slip:

  1. What went wrong

  2. Why it went wrong

  3. Rule to avoid it next time

Fear will always be around. The trick is not to let it keep you frozen. Start small, step by step, and you’ll notice your confidence growing.

If you want to go deeper into these lessons and build a solid foundation for your financial life, my new eBook The Money Game is now open for pre-orders.

You can grab your copy here and get an instant Sneak Peek:

https://dividendhorizon.kit.com/where-is-my-money-preorder

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