Let Go of Irrational Fears

When we talk about the chances of something bad happening, people tend to fall into three general groups.

  • The Numbers Don’t Matter No matter the odds, this group dismisses the statistics. People insist they can trust their gut. I suspect this group buys lottery tickets every week.
  • The Odds Look Great This group focuses on the good news. If there’s only a 10 percent chance that something bad will happen, they stick their worry in a closet. They prefer instead to focus on things other than the small chance a bad thing might happen. People in this group will buy plane tickets even after a plane crash because they realize it’s still safer than driving a car.
  • We’re Doomed No matter how low the risk, this group can’t help but focus on it. They plan and plot and worry about how to avoid the 10 percent chance that something bad will happen. People in this group worried a lot about dying from Ebola, even though odds for most of them were greater that they would die from the flu.

I want to focus on this last group. To be sure, today’s world can be a scary one. In some ways, I’m surprised we don’t all walk around thinking, “We’re doomed!” After all, during the last 15 years, we’ve lived through what seems like countless terrorist attacks and financial crises that seem unending. It feels like the chances of something really bad happening at any time are huge.

But what if they’re not?

What if our worry about the 1 or the 5 or the 10 percent chance of something bad happening blinds us to the rest of life? For example, in 2013 the most common cause of death was heart disease. The Centers for Disease Control and Prevention statistics show that it caused 611,105 deaths. During that same year, 40 people died from salmonella.

Just think about that for a minute.

Clearly, the potential risk of dying from heart disease was greater than the risk of dying from salmonella. But if you read the news stories about the E. coli outbreak at Chipotle recently, it became really easy to fear for our food safety and to ignore our weekly cheeseburger habit.

We do something similar with our money fears. Over the last few years, I’ve lost track of how many people have told me about their plans to avoid any fallout from the next financial catastrophe. “Great,” I tell them, “but how do you know what will happen next time?”

They all begin answering my question in roughly the same way. “Well, the last time …” Do you know how small the probability is that the next financial crisis will look exactly like the last one? They’re focused on the teeny, tiny possibility that what happened last time will predict what happens the next time.

Whether we’re talking about our money, our health or our safety, we’ve got to get past that fear of the thing that has a tiny chance of happening. This fear blinds us to making the most of the remaining 90, 95 or 99 percent. Once we’ve done everything we reasonably can do to be safe, once we’ve accounted for everything within our control, we need to learn to let go of the rest.

One of my favorite examples of misguided worriers are the investors who insist on trying to build a portfolio that will survive any market situation. That’s just not possible. But we can build a portfolio that handles most of what the market might do within the context of our short- or long-term goals. And that needs to be enough.

In life, the chance of something bad happening will never be zero. But I think Calvin Coolidge got it right when he said, “If you see 10 troubles coming down the road, you can be sure that nine will run into the ditch before they reach you.” Let’s see what happens if we save our worry for that 10th trouble and let the rest run into the ditch.

This commentary originally appeared November 10 on NYTimes.com

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Carl Richards, CFP®

Carl Richards is the creator of the weekly Sketch Guy column in The New York Times and is a columnist for Morningstar Advisor. Carl has also been featured in The Wall Street Journal, Financial Planning, Marketplace Money, The Leonard Lopate Show, Oprah.com and Forbes.com. His simple but meaningful sketches served as the foundation for his first book, "The Behavior Gap: Simple Ways to Stop Doing Dumb Things with Money."

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