Beat the fear of financial jargon

What you’ll learn:

• What effect investment jargon can have on us.
• Which terms confuse investors most.
• How to make investment jargon seem less daunting.

Investment jargon can be enough to make you want to run screaming for the hills, but there are ways to make it seem less intimidating.

A first-of-its-kind study from Barclays Smart Investor and Goldsmiths University found complicated investment terms can be such a turn-off that they often provoke a physical reaction in us. Nearly half (44%) of people we spoke to reported an increased heart rate when presented with investment jargon, whilst one in five said it made them break out in a sweat.

The terms that most terrified people were ‘stockbrokers’ ‘asset manager’ and ‘investment risk’, with ‘pension’ and ‘FTSE’ also causing a stress reaction.

“We naturally struggle to do things which make us feel uncomfortable, even if doing it would be in our best interests,” says Dr Pete Brooks, Head of Behavioural Finance at Barclays Smart Investor. “These results are fascinating because they suggest that it isn’t just a lack of understanding which is the barrier to investing. There appears to be a much more sub-conscious reaction to the language of investing, which education alone will find difficult to break down.”

Confusion reigns

There are plenty of financial terms which baffle us. Our research found that one in 10 people thought that a ‘blue-chip stock’ was a poker move, whilst 29% assumed a ‘bull market’ was a place in Birmingham.

It’s hardly surprising then that three-quarters of Brits said they didn’t feel confident enough to invest their money, with a quarter (25%) feeling as worried by the thought of investing as skydiving.

Nearly half of those questioned (44%) said they thought investing was harder than mastering computer coding, whilst 29% said it was more difficult than ballroom dancing. Nearly one in four (24%) said they though running a marathon would be easier than investing.

Five ways to reduce the fear factor

The good news is there are plenty of ways to manage stress when confronted with investment jargon. Here are our top tips to make investment jargon less daunting:

1. Break it down

If you come across a whole load of investment lingo you simply don’t understand, it’s easy to feel overwhelmed. However, rather than panic, try to break it down sentence by sentence and look up any terms you’re uncertain of. Dealing with it in small chunks can be less intimidating that trying to get to grips with everything all at once. Doing this can really help reduce any mental overload.

Find out what some of the most common investing terms mean

2. Explore lots of different sources of information

Just because you’ve read something you really don’t understand, that doesn’t mean everything you read about investing is going to be packed with jargon. There’s lots of information out there which goes back to basics to make your investment journey easier. On our Barclays Smart Investor platform we have lots of useful articles and videos to help guide this journey, including how different types of investment work, and how to begin building an investment portfolio.

Learn more about Smart Investor

3. Fight your fears

It’s human instinct to want to run away from the things that frighten us. Any meaningful decision can be tough, particularly when it means moving from things which feel comfortable to things which involve a bit more risk, like investing. You may get similar feelings if you consider leaving the security of a job you have been in for a while to take the plunge of running your own business. Focussing on what you are trying to achieve can help you understand the steps you take to get there.

Read our Beginner’s Guide to Investing

4. Talk to someone in the know

If you know anyone who has plenty of investing experience, it’s often a good idea to ask them to explain the basics to you. Having a conversation about investing can be less daunting than reading up on a subject, and once you’ve discussed it, it might make anything you read on investing easier to understand. Remember though, you shouldn’t follow anyone’s advice unless they are properly authorised and regulated to provide it.

5. Get professional help

If you’re still not confident about getting to grips with financial jargon, or whether investing it right for you, seek professional financial advice. An adviser should be able to recommend the investments that are suitable for you and explain how they work, so you can be confident you’re not putting your money into anything you don’t understand.