4 Excuses People Make for Not Investing
American professor H.W. Lewis noted the importance of investing when he said, “Those who are unwilling to invest in the future haven’t earned one.” Most of us have heard how important investing is, yet a Bankrate study released in April 2015 found that more than half of Americans are not invested in the stock market, whether it’s through individual shares, mutual funds, or retirement funds like 401(k)s and IRAs. We might think we’ve got good reasons for not investing, but most of these can be easily shot down.
“I’m too young to worry about investing”
Experts agree that the younger you are when you start investing, the better. That’s because you have more time to accumulate a portfolio and let it work for you. With time on their side, young investors can contribute less money per month to their portfolios but still end up with more than investors who start out older.
Investing will also ensure that your money works smarter. When your money sits in a savings account, it earns two percent or less in interest. With inflation sitting at about 3 percent, it’s easy to see that failure to invest will diminish the value of your nest egg. However, people who invest in shares can reasonably expect a return that will well outpace inflation over a period of several years. No matter what your age, putting your money to work just makes good financial sense.
“I don’t know where to begin”
The investment market can be so intimidating that many Americans give up before they begin. However, you don’t need a finance degree to make smart investment decisions. As Warren Buffet once said, “To invest successfully, you need not understand beta, efficient markets, modern portfolio theory, option pricing or emerging markets. You may, in fact, be better off knowing nothing of these.”
Consulting a financial manager might be a good first step, but these professionals are expensive. If you’d prefer to hang on to more money to invest, then explore investment potential on your smartphone. With more than 1.5 million apps on the iTunes store, it’s easy to turn your convenient and accessible iPhone 6s Plus into a pocket-sized investment guide. T-Mobile offers memory options on the iPhone 6s Plus from 16GB to 128GB, so you will have plenty of room for a variety of investment apps. Great apps for first-time investors include stock market simulators, which allow you to invest with virtual money until you gain confidence, and trackers offering real-time stock market, commodities, and currency movements.
“I’m already living paycheck to paycheck”
The idea that you need a lot of money to invest is a myth. Even small amounts of money compound and grow year after year. Investment options like stocks can start with a very small financial outlay.
One of the best investor apps on the market is Acorns, which allows users to invest their spare change. You can link your credit and debit cards to the app, which rounds up regular purchases and invests the difference into index funds handpicked by Harry Markowitz, a Nobel Prize-winning economist. It’s a great way to build up an investment portfolio with pennies, especially for people new to the market, who aren’t confident enough to make their own investment decisions.
The Acorns site shows that if you invest just $30 a month with an aggressive investment strategy, in 10 years it could turn into more than $5,000. This just proves that any sum you can spare will grow quickly.
“Investing is too risky”
The global financial crisis took a toll on many investment accounts, but these tough times shouldn’t scare you off the idea of investing. Despite periods of recession, the investment market has shown strong growth in the long term. When people invest for short periods, their portfolio might lose value. However, if you consider investment a long-term money strategy, you’ll watch your portfolio grow.
Remember that investing puts you in the driver’s seat. You can choose conservative, moderate, or aggressive investments, depending on your confidence and risk tolerance levels. Creating a diverse portfolio will also help cushion your investments from the volatility of the global financial markets. If one investment loses money, a different type might gain.
So what’s really holding you back from investing? No matter what your circumstances, there are several good reasons to stop procrastinating and invest any money you can spare today.
Image via Flickr by StockMonkeys.com