Got stock?

Get in the Game!

I’m sure you’ve read about it in the newspaper or overheard someone talking about his or her experience in the stock market.  And you probably did nothing.  I’m sure you’ve glanced at a magazine about the different ways to invest or saw the cover of someone’s book about how they made millions trading stocks.  And you still did nothing.  You even saw one of those witty commercials from a brokerage firm that led you to browse their website.  But still, you really did nothing.  The problem is…

You are going to regret doing nothing.

By the time people realize they should invest in the stock market and actually do it, it’s too late to benefit from it.  The truth is if you invest over the long term, you’re almost guaranteed to make money.  So before you have to postpone your retirement or hate yourself for not having meeting your goals, I’ll give you the top 5 reasons why you aren’t doing anything and what you can do about it.

1. Knowledge.

This is the biggest obstacle for people because who would put their hard earned money into something they don’t fully understand?  All of the reports of the ups and downs can be very intimidating.  Plus with the countless options and places to invest, you ended up paralyzed.  The easiest way to fix this problem is to start reading.  Look past the numbers and start reading the entire article, visit websites and learn the terms behind the numbers.  Once you know the difference between a stock and a bond, you will feel more than comfortable investing in them.

(Fix: Subscribe to Money magazine)

2. Fear

If you were alive in the past two years, you know how fragile the market is.  People all over the country had one collective gasp as they saw their stock portfolios drop.  This scared people into selling stock they shouldn’t have or avoid the market altogether. (This ironically made the recession worse).  The quickest way to get over your fear is to understand the market.  You will understand the balance between risk and reward and realize that if you weather the short-term pitfalls you will make money over the long-term.

(Fix:  See #1, Assess your personal level of risk, Start small)

3. Other People

I’m sure you’ve discussed the stock market with people and they tell you how you’ll lose all of your money.  Here’s the problem, the people telling you this are just as broke as you are.  No man or woman with any real wealth would tell you not to invest in the stock market.  You wouldn’t get fashion tips from someone who can’t dress, so why would you accept financial advice from your cousin who just asked you for $20?  Stop listening to people who don’t know what they are talking about.

(Fix: #1, Join an investment group, Read “Rich Dad, Poor Dad”)

4. No money

Many people feel that they haven’t made enough money to start investing in the stock market.  First, most people do have enough to invest but they spend it on sneakers.  Second, people don’t make money then invest, people make money by investing.  If you have $25 each month, you can start investing today.  I’m sure you can pass up on that trip to the movies to start investing in your future.  You will be surprised how fast your money will add up and that will encourage you to invest more.

(Fix: #1, Cut out frivolous expenses, automatically invest into your Employer retirement account)

5. “I have plenty of time”

Just because you have 30 years to retire, people feel like they can delay investing because “the stock market isn’t going anywhere.”  When it comes to making money in the stock market, time is an even bigger asset than money.  I’ll give you this example:

Person A starts investing $2,000 each year at age 20 for 20 years, then stops contributing on her 40^th birthday, assuming 10% returns she will have over $1.3 million dollars when she turn 65.

Person B starts investing the same $2,000 each year at age 40 and invests for 25 years, given the same 10% she will have just over $215,000 when she turns 65.

Even though Person B put an extra $10,000 into her account, because she started 20 years later, she lost out on being a millionaire.  There is never a bad time to enter the stock market but the best time to start is yesterday.

(Fix: Don’t just read this post – take action now)

Start with #1.