Maybe you’re playing it safe for now - CDs and government bonds mean you sleep better at night. Maybe you’ve had enough of the volatility and market-induced stomach ulcers. I can’t say I blame you.
But just as the saying “what goes up, must come down” holds some truth, so does the opposite. This economy will eventually swing back up (for more than a day or two) and when it does, you want to be ready for it. Investing in the stock market still remains the best way to increase your wealth. You just have to avoid using these common excuses that even capable, intelligent people use to avoid the stock market:
It Sounds Like a Bunch of Hype
Certainly your mother taught you that if it sounds too good to be true, you should just walk away (but politely of course!) So when you hear people talk about earning higher returns by investing in stocks, ETFs, index funds and the like, you pretty much turn a deaf ear.
But have you stopped to investigate? While you can’t just pick stocks like playing Pin-the-Tail-on-the-Donkey, building an intelligent investment portfolio almost always beats letting your bank or the government use your money for (practically) free. So put your skepticism aside and learn the skill of investing. You’ll find that: 1.) Your mom was right in a way – it takes some time and effort to learn how to build a proper portfolio and monitor it skillfully; but 2.) Once you put the time in, you’ll earn, on average, far better returns than you were getting elsewhere.
You’re Risk Averse
People who don’t yet understand the stock market tend to over-estimate the amount of risk involved in buying stocks. They figure that “playing” the stock market (as they like to say) is almost as reckless as taking their nest egg to Las Vegas and sitting down at the black jack tables.
As it turns out, it’s not that risky – and besides, a fair amount of risk aversion can be a distinct asset to the stock market investor! You’ll painstakingly research the fundamentals of the stocks you’re considering adding to your portfolio. You’ll carefully balance your portfolio along many different dimensions. And you’ll monitor those investments closely, selling the instant you’ve reached your pre-determined sell price.
Your Schedule is Packed
What do you do if your work seems to take up all your time? Or if you spend more time at your son’s hockey practices than at your computer? Or if you barely have time to go to the gym, let alone worry about your financial future?
Learning about investing doesn’t take as much time as you might think. Have a colleague who can give you tips on building a balanced portfolio? Claim you’ve got a chiropractor’s appointment and leave work a couple hours early! And what about that book that comes highly recommended from an investor friend of yours? Squeeze in an hour’s worth of reading while your kid does his best Sidney Crosby imitation! Once you get the hang of it, you’ll realize you do in fact have enough time to become a skilled investor.
You Haven’t Got a Clue
What if the only reason you haven’t started investing in any stock market products is because you don’t know how? Don’t worry — investing is a skill that can be learned. (And it’s not like trying to be the next Tiger Woods either. Dad doesn’t have to get you your first stock software package at age 4 for you to be any good as an adult.)
So, begin exploring the many excellent resources that are available. You’ll find many articles and free discussion groups on the internet, and there are many books and seminars out there as well. You’ll soon see that getting started was the hardest part — once you have the right information and the right tools at your disposal, there is nothing holding you back!
If you see yourself in any of the descriptions above, it’s never too late. Don’t let a bad excuse prevent you from earning above-average returns and achieving all of your financial goals!
Article written by Jim Gianoglio (guest author of TradeOrInvest.com)
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