Investing is something that most of us know we should do, but we often find reasons to put it off. Here are the top 5 reasons we’ve heard for people not getting involved in investing and ways to address them so that you can take the next step in financial empowerment.
1. Not Enough Time
You’re busy with work or kids or just the daily demands that life throws at you. So it feels like there aren’t enough hours in the week to research stocks to invest in or get up to speed on the latest in the economy.
In this case, it’s helpful to understand that it may not take as much time as you think. Certain steps like setting up a recurring deposit, investing in index funds or working with a professional may help alleviate the amount of time you’d need to dedicate. It doesn’t need to feel like another task on your schedule, but taking care of your finances can really serve to give you some peace of mind.
2. Don’t Know Where to Start
The old adage that you should “invest in what you know” is a good one. Think about the brands and companies you engage with daily. Look at companies that you believe will be here 10, 20, or even 30 years from now. Invest a little so that you can get comfortable with the process and as you gain confidence think about a portfolio mix that works for you.
3. Think That Investing Is Too Risky
The only person that can tell you how comfortable you are with risk is you. So it is important to know two things: (1) Investment gains require that you take on some risk and (2) what kind of risk taking you’re okay with.
If the idea of losing money on an investment is something you can power through as a long term investor (because there are days when your portfolio might go down) then there are many investing styles you can explore. If the idea of losing money keeps you up at night, then you want to pick something that’s a little more conservative or maybe enlist the services of a trusted investment manager that might help give your more assurance that you’ve made informed investments.
4. Having Lost Money to Investments Before
It’s understandable that you may not want to relive the past trauma of money lost in an investment. It is important to determine if that fear is worth sitting out of the stock market or if that previous experience could serve as a learning opportunity. Ask yourself, if you had done something differently in your previous approach may have changed the outcome— could consulting a professional, selecting a less risky investment, or having more patience changed the outcome?
5. Lack of Confidence
Investing may feel like rocket science, but it can really be as simple or as complex as you decide to make it. If you’re just starting out, keeping it simple and start off slowly if you need to. Make sure you begin with an amount that you’re comfortable with. And as you learn more and become more sophisticated, you can decide to add complexity or keep it simple for the long run!