Investing in the stock market can be life changing. Even simply contributing up to the employer match in your 401(k) can drastically change the lifestyle you enjoy during retirement. Though because investing can be life changing, it can also be intimidating. It’s not so much that it’s mentally taxing to invest in the stock market – it’s mostly intimidating because of the emotional aspect of investing. If you are someone who’s intimidated by the power of investing, this post is for you. This post will give you the confidence to begin investing right away.
Set a Goal
It’s important to give yourself a reason to invest. Pick one of two ways to frame your investing goal. The first option is to frame it in a way of looking at what you’ll get by investing: a new Corvette, for example. The second way is to consider what you will lose if you don’t invest: the ability to retire early, time with grand kids, the ability to travel…
Using whichever method works best for you, set a goal. A goal will give you hope. Hope brings action. Action brings the achievement.
Take a Tested Approach
Investing in the stock market seems scary because there is a silly stigma surrounding it. Most people think investing is risky, scary, and only for rich people. But many, many people invest in the stock market. It’s the way most people save for retirement. Something this widespread cannot be terribly difficult.
To make things easy on yourself – take a tested approach by buying into an index mutual fund. Since an index mutual fund doesn’t try to beat the market, the performance tends to follow the trajectory of the ever expanding global economy. And for most people, that’s fine because the stock market, on average, has offered excellent returns since its inception.
You needn’t be a prodigy to begin investing. Stick with an index mutual fund and put your investments on autopilot.
Let People Help
Reading stock tickers all day may lead to feelings of loneliness and vulnerability. Investing doesn’t have to be that way. You can find real people to help. This can be done in a few ways. Obviously, you could get a financial advisor to assist you. You could also pop over to your human resources department and ask for someone to help explain the company’s 401(k) options. You’ll be surprised how ready to help they are (not many people are curious about 401(k) details). You can also contact companies such as Vanguard to chat with a representative. Even though they can’t help give you specific purchasing recommendations, they can help answer many questions you will have. Consider also speaking with friends/relatives/neighbors. Get their two cents. Finally, you can get advice via personal financial blogs (like this one) and via online forums. There are many personal finance nerds (like me) who loves help.
Make It Automatic
My guess is that fewer people would go skydiving if they knew they would have to do it over and over again. So make things automatic to lessen your stock market fears. This way you don’t have to keep making major decisions over and over again.
To make things automatic, set things up to succeed in the long-term. This way, you won’t have to pick investment vehicles often, you won’t have to continually guess how much you should invest, and you won’t have to always wonder how often to rebalance the portfolio, etc. Create a plan and then stick to the plan.
Leave FOMO Behind
Some people have this attitude towards investing. They feel that if they invest the money, they won’t be able to have fun now. It doesn’t have to be that way.
First, realize that delayed gratification is a good thing. Second, realize that the money you save to invest doesn’t have to make a large impact on your lifestyle. Most people don’t need to invest half of each paycheck in order to look forward to a fulfilling retirement. Third, realize that you can always make more money. Let’s say your newly hired financial advisor says you should save 15% of your income in order to live the lifestyle you want at retirement. Okay. If 15% of your current salary is a lot, then find ways to increase your income. Expand your mind and expand your bank account.
Make It Count
You have the tools necessary to invest with confidence. There’s no need to be afraid. You’ve read enough. It’s now time for action.
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