Investing is a vital part to growing wealth. We may not learn it sufficiently in the educational system, but ignorance does not absolve us from the need to start investing at some point. As with anything else in life, excuses can get in the way of accomplishing what we know we need to do.
A recent study by Bankrate proves that many of us make excuses that delay investing. The report shows that over half of Americans are not investing in the stock market. There are a variety of reasons behind this statistic, but many of them can be solved rather simply. This might seem insignificant on the surface, but staying out of the stock market for years at a time can be disastrous to one’s attempt to grow wealth. Take a look at some of these common investing excuses to see if you’re guilty of them and what you can do to overcome them.
“I Don’t Have the Money”
This was the number one reason people gave for not investing. There is a belief that it takes a lot of money to invest. More is certainly better, but you don’t need to have a lot to get started. In fact, there are many ways you can begin investing with little money.
There are options like Acorns or Robinhood that let you start investing with your spare change or allow for free trading. There are also a number of online brokerages that have $0 balance requirements.
If you look at your budget and see there’s no money to start investing, look for something you can cut; even small slashes can create room in your budget for investing. Can you cut any of the following?
- Magazine or other subscriptions
- Meals out
- Cable channels you don’t watch
That only scratches the surface, but you can take that extra money and apply it to investing. Even if it’s only $50 per month, that’s enough to start.
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“It’s Too Hard”
Lack of understanding is another common investing excuse. Investing in the stock market can be difficult, but at its core it’s easier than you might think. Recent technology advances and online investing options make it simpler than ever.
Besides the plethora of free investing information available online, many 401(k) providers also offer free education. If you don’t have access to a 401(k), you can consider a robo-advisor as they act as a virtual financial advisor managing your investments for you. Don’t let difficulty or lack of confidence hold you back. Just get started.
“I Don’t Have Time Now. I’ll do it Later.”
Many believe there is no harm in putting off investing by a year or two. However, that one or two years can easily turn into five or more. Believe it or not, time is your best friend when it comes to investing in the stock market.
In fact, the Center for Retirement Research states that if you wait until age 45 to begin investing, instead of starting at age 25, you will need to save three times as much in order to retire at age 65. Simply put, you’re only harming your future self by giving into the belief that you can put investing off and not pay for it later.
“I Can’t Trust the Stock Market”
Looking back at what the stock market was doing in the mid-2000s it’s easy to think it’s unreliable. Investors lost half, if not more, of their retirement savings and companies went out of business. That stokes an understandable fear.
However, what has the stock market done over the past six years? It has had a great bull run adding wealth to many who stayed in. You also need to consider the fact that in every decade (except the 1930s) over the past century the stock market has returned a positive result. Instead of looking at the short term fluctuations of the market, focus on its historical, long-term results.
“I’ll Lose Money”
When you invest in the stock market, you will lose money. There is no getting around that fact. However, when done wisely, investing in the stock market is not like gambling where you’re opening yourself up to foolish risk. While you will lose money, you also have the potential to make money – especially when taking a long-term view.
If you think you’re saving yourself money by staying out of the market you’re just making excuses that could derail your efforts to achieve financial independence. Instead of sitting on the sidelines thinking you’re just fine, make your money work for you and realize short-term losses can pale in comparison to long-term gains.
Investing in the stock market can be overwhelming, but it doesn’t have to be. Instead of giving into excuses, find ways to take advantage of opportunity.