Stock Market Investing - 6 Causes of Financial Stress

We may not read about it in the medical books, but financial stress has proved to be both a physical and social epidemic that can destroy people's lives and families in its own way. Unfortunately, today our lives are intrinsically connected to the financial world. When market's crash and banks fail, we bear the brunt of it. While there isn't any medicine for financial stress, the treatment often lies in understand the root cause of such stress.

Unmanageable Debt

We live in the world of credit today, where we are encouraged to buy what we need on credit and pay it back later. However, luxuries like home and car cost a lot more than what an average person's salary can buy up front. Add to that the fact there are so many ways of getting credit to buy all these, very few can resist the temptation. Soon people find themselves saddled with debt then they can barely pay off while living comfortably off their income. As fears of losing their home or financial security increase, financial stress sets in, causing sleepless nights, manifesting in irritation, depression and arguments.

Increasing interest rates

Home loan interest rates seem to have gone up in the recent past as steeply as the saving account rates have falls. Consequently, they is more to paying compared to what we are saving. For those who opted for floating interest when taking loans, the ever increasing interest rates have become a nightmare. As the premium on their loan increase beyond the comfort zone, financial stress creeps in.

Stock market crash

Due to low rates on savings accounts, people have started to move towards investing in real estate and stock markets. Unfortunately, the stock market is a volatile place and crashes are unforeseeable. However, the incredibly high returns still tempt people to invest in stocks. Even a small dip in the market can wipe the entire savings of a small investor. No can really be prepared for such an abrupt shock, even if they know the risks. Stock market losses have destroyed more lives than any other financial stress factor.

Real Estate Worries

Increase in interest rates and an uncertain real estate market has made investment in real estate highly stressful as well. Not being able to may mortgage meant many people had to lose a roof of their head and move into rental accommodation. As house prices fall, investments become losses and becomes the cause of financial stress.

Lack of Job Security

In the current economy, job security is nonexistent. Leaving aside the private sector, even public sector jobs are no longer secure as the Government, staggering under high debt itself, starts cutting down government projects, shutting down offices and causing layoffs. To be frank, absolutely no one has any guarantee on their job these days and very few private companies are still offering pension schemes. Job loss can mean drastic change in financial circumstances. Especially when you have loans to repay and meager savings in the bank, job loss can be the biggest cause of financial stress

Government Policies

Generally public policies don't cause financial stress in a regular household. However, post the credit crunch, governments everywhere started introducing austerity measures, cutting down benefits and levying higher taxes in an attempt to pay off their own debts. These policy changes are fast trickling down to families that already live from pay check to pay check. Even small increases and cuts can mean huge headaches for such families, as they wouldn't have factored in such cuts when purchasing houses or cars on credit.