Top 6 Excuses Why You Are Not Investing … Change It Today
Most people that I talked to DO KNOW the importance of investing. They have heard of the compounding effect and how money can make more money. However, there is an inertia to take action.
Below are some of the most common excuses that people have when it comes to investing their money. Can you relate to any of them? Read on to find out what you can do about each of them.
Excuse #1 - I Don’t Know How To Invest
It’s true, you don’t know what you don’t know, right? It could be what the stock market is all about, how to set up a trading account or even how a stock works!
Of course, you should invest only in something that you understand. You have to make time to learn as much as you can. The good news is that there is a lot of information available out there. Provided you look only at reliable resources. As long as you take those baby steps and focus on learning the next steps, you’ll realise that you’ve come a long way in no time at all.
Don’t let that annoying paperwork hold you back from opening your bank or your trading account. Don’t be deceived into believing that investing is only for the “smart people”. You can always get your money to work for you as long as it is in line with your risk profile. Just learn how to start investing.
Excuse #2 - I Don’t Know What To Invest In
Now after you have already set up the foundation and you are ready to start investing, the next big question is WHAT DO YOU INVEST IN?
The “what to invest in” is a little bit of an art and science.
Fund managers who are great at stock picking have differentiated themselves and made a fortune. Think Warren Buffett, Charlie Munger, Peter Lynch, Benjamin Graham etc.
The good news is that as a new retail investor, there are easy ways to get started with investing. You could buy into broad market indices, comprising the largest companies in each market. You could buy into specific sectors that you have a personal preference for. All these are made possible with Exchange Traded Funds (ETFs) which are easily traded on the stock exchanges.
In recent years, Roboadvisor platforms have become more popular. These are online platforms with automated portfolio managers that use algorithms to offer financial advice.
They are a good option if you are totally clueless about investing. However, the downside to this is that you are relying on a middleman which charges fees regardless of market performance and you still have to take on the same market risk as investing on your own. If you are able to invest on your own, you will have more control and also be able to save the middleman fees, which you can use to contribute to your retirement fund.
Excuse #3 - I Am Overwhelmed By Data
Investing is not rocket science. Yes, there are financial statements, numbers and ratios. As a new retail investor, we need to use data that has been processed by research houses. Their full-time job is to process data and provide the summary to investors. So if you have access to this processed data, why not use it?
I encourage you to use research reports that are written by reputable banks which you have access to. Often you can find these research reports online, updated regularly on their websites. Alternatively, you can sign up for their mailing list so that they can notify you when there is a new report written.
Yahoo finance provides financial data for the last 4 years and provides you with already done up valuation measures and common financial ratios.
Over the years, I have simplified the process of identifying stocks which fits my portfolio. I use this all the time for my coaching program and it has proven helpful as a quick guideline for my newbie investors.
Excuse #4 - I Have No Time And Energy
I’d like you to think about this statement. What takes up your time and energy? Most people will say “work and family”. That’s valid. We want to spend our time working, putting our talents out into the world in exchange for money. We want to spend our energy with our family, friends and loved ones who bring meaning and joy to our lives.
One of my students Selina is an ambitious professional. You see, Selina loves her job and spends much time working and travelling for business. She had never invested in the stock markets before but she was an eager student. When she joined my coaching program, she “warned” me that she doesn’t have much time to look at her investments.
The thing I love about long term investing or passive investing is that when set up right, it doesn’t need to take up so much time! And once it’s up and running, it will continue to bring you passive income for as long as you wish.
After several lessons, Selina, the busy professional, told me that she enjoys checking into her portfolio every morning because it is fun and exciting to watch the market. In fact, it gives her a boost of energy.
Click here to watch what Selina says a year after completing her coaching program.
Excuse #5 - I Have No Money
Right, if you have no money, you won’t be able to send out your money to work. That is a fact.
However, you can start small where you are. Managing your finances well is not just about investing your money. It could also be focusing on making sure that you have savings every month. Don’t try to use borrowed money to invest because this strategy might come back and bite you when the market turns.
When you don’t have much savings for investing, your risk profile or your ability to take risk is naturally low. You will not want to risk that money, even if your willingness to take risk is high.
In my coaching program, identifying your risk profile and investing in line with it is very important. What others invest in may not be suitable for you. Hence, I never recommend following the trades of others.
Excuse #6 - I Am Afraid To Lose My Money
This is a big one. Even if you have all the finance knowledge of how to invest, you have your accounts set up, very often self doubt and fear may hold you back from doing what you intend to do.
The result? Your money sits in the bank doing nothing. Correction. Your money sits in the bank losing to inflation.
Your money mindset determines how you make financial decisions. Each time a financial decision makes you feel fearful and uncomfortable, slow down and think about it. What exactly makes you feel uncomfortable and is it a reasonable fear?
For example, when you want to buy an item, do you need to spend hours to compare prices extensively and you are willing to travel the distance to buy the item so that you can save $5 and feel happy about it?
Or do you have an imaginary spending limit that you impose on yourself which doesn’t really make sense? “I cannot spend more than $100 on a dress”, yet you will go out and buy 10 (cheap) pieces of clothing, all below $50. Then you wonder where your money went to and perhaps why you still don’t seem to have something presentable to wear on occasions.
These limiting money beliefs drive your decisions but they may not serve you well.
Which of the above excuses can you relate to most? Are you ready to make a change? What is one thing that you can do today to move yourself forward in your investment journey?
If you know that you should invest and you are all ready to take action, watch my free Masterclass “Invest with Confidence” to learn about 3 mistakes that new investors make and also the right way to build your retirement fund. Enjoy!