There’s a lot of reasons why people are afraid to start investing. Some reasons are valid, while others are simply myths or unimportant. Some of those fears can mitigated with proper education and mindset. It goes without saying there are risks involved in investing. Here are some common fears and myths.
Investing is only for rich people
Firstly, No. Investing is for everybody. More and more brokerages are allowing trading with no commission fees or account minimums.
Secondly… How do you think they got rich? Investing is a way to grow your wealth. Unnecessary spending is a pathway to being broke.
You don’t have to start with a lot of money. Open up an account with zero dollars and set up direct deposit to that account with as little as $25 per check. As you continue to deposit you’ll quicky realize how small deposits add up when combined with stock growth and dividends.
I don’t really think about investing
I think this is the biggest reason why people don’t get into the market. Most people don’t think about the market because it’s not taught to them. It’s not talked about at the dinner table. I also believe there is a cultural aspect to this as well. Some cultures have to focus on keeping the roof over their head for so long, when they finally have the money that they could be investing, it’s not even a thought in their head.
This was the case for me, its just not talked about in my culture. Not at home or the homes of my extended family. I got into it because it looked cool and it had better chances than the black jack tables. Needless to say I made lots of mistakes early on.
I like using money for things that I want
I blame the capitalist market for this. People at a young age are drowned in advertisements urging them to pull out their wallet and spend money for the next greatest thing. Most people are programmed to earn to spend. Ask yourself how often do you buy something to satisfy yourself. Whether it be a small trinket, computer part or a video game. For me, it happened so frequently that I couldn’t even account for the things I bought. I have drawers and closet full of things that I can’t find. I would re-buy things that I forgot I already had. As long as you continue to think this way, you’re basically being controlled. Focus on stopping that.
First, try to stop spending. You don’t have to spend the money just because it is in your account. Let that money roll into your next pay period. If you still want that trinket, then go buy it. Chances are that your very impressive account balance will help you forget about it.
Whenever your have extra cash, tell your self that you’d rather have 10k in your portfolio than extra trinkets that will end up worthless. Deposit that into your portfolio and grow that wealth.
Investing is just too risky.
It is, without a doubt. Make sure you make your investing decisions with a 10 year goal. Even if you don’t plan on doing it that long, focus on the 10 year timeline and ride those waves.
I’m sure you’ve heard about diversifying your portfolio. But buying an assortment of stocks isn’t enough to mitigate risks, you also have to diversify the actual investment tools. Mix fixed income assets like bonds and brokered CDs with your ETFs, stocks and mutual funds.
Where should I start?
I recommend brokers like TD Ameritrade, they offer a myriad of investment tools and tons of videos, live courses and articles about investing. You can even call someone for advice.
Robinhood is one of the most popular brokers for young people, but I no longer recommend it. Robinhood focuses on ease of use and accessibility. The reasons I don’t recommend it is because they don’t offer the safer investment tools such as brokered CDs and fixed income mutual funds. There is also zero education and no one to call for help. Their chat support is for issues with the app, not to help you become a successful investor.
Hopefully I’ve convinced you to open that account and grow your wealth. If I have, tell me about your journey below.
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