Five mathematical principles for investors to grasp

Don’t have a mathematical brain? The good news is, help is at hand. The level of numerical sophistication you require to handle your personal finances and investments is, in any case, more basic than you might think. There are really just five key concepts you need to grasp.

Do you suffer from arithmophobia? No, we aren’t talking about arachnophobia here, but the anxiety that many people feel when dealing with something we encounter far more frequently than spiders — numbers. This condition can range from a general discomfort around numbers and avoidance of mathematical tasks to a severe phobia that significantly impacts on daily life, work and career opportunities. Arithmophobia is also remarkably common, and there are several reasons why. Many people have negative experiences of maths in school. Some had parents who struggled with numbers. Many people, of course, find it genuinely difficult to process numerical information, but many others have wrongly assumed that they’re just “bad at maths”. There are many things that arithmophobics can find challenging, and one of them is handling their personal finances. They avoid getting to grips with their bills, credit cards, taxes, budgeting or savings because they feel anxious about maths. They particularly struggle with long-term investing. There’s no escaping the fact that, to understand investing properly, you do need a certain degree of numeracy. But the good news for those who feel daunted by mathematics is that the level required to be a successful investor is relatively basic.

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