There are a lot of mistakes you can make with your money you can overspend let it rot in a savings account invest it in the wrong stocks or gamble it away and while all these things will ruin your financial well-being there is one money mistake that most people are doing that is in fact much much worse and in this I will share with you the one money mistake that will keep you poor forever life-changing content if you were to do an analysis of the total American population you would find that one commonality exists amongst more than 150 million people and that commonality is not this group of people all owned cars have mortgages or even have credit card debt withdrawal probably true the one thing that ties this group of people together is that none of them invest their money and when I say that they don't invest their money I don't just mean investing in single stocks I mean they don't invest in stocks bonds mutual funds ETFs real estate retirement accounts or a dare.
I say even cryp to currency the sad truth is that nearly half of all Americans are letting their money a road by sticking it in a low interest savings account as they already know even savings accounts that offer a higher than average interes rates of say 1.8 percent aren't enough to fight inflation in fact the average inflation rate in the United States in 2019 was 2.3 percent so if you left your money in a 1.8 percent savings account all year you would actually have lost half a percentage point on your money what's worse is that many people know just how powerful investing can be let's use an example to illustrate this point let's say right now you're 25 years old and you decide to invest five hundred dollars a month.
In a low-cost diversified index fund if you do that until you're 60 years old you'd end up with 1 million a hundred and forty eight thousand four hundred and eighty-three dollars which is spent properly would give you more than enough money to retire on in fact in recent pollsres pondents said that their primary investing goal was to save for retirement eat only 20% of them were actually taking the steps necessary to make that happen so if investing is acknowledged by the masses as being an important factor in building a solid financial future then why are so few people investing the truth is that many people are allowing their fear of losing money to stop them from leveraging the power of stock market investing in some respects.
The years weren't it at the end of the last decade young professionals watched in horror as the stock market lost more than half its value over a year-and-a-half span college savings accounts were decimated plans for retirement postponed and in many situations homes and cars were lost many young people who witnesses turmoil during their formative years walked away with what they thought was the lesson to be learned from the markets tumble don't invest in capital markets but I think it's worth asking how scary is market investing really since 2000 the stock market is represented by the SP 500 index has crashed or had a major drop in8 out of 18 years with annual losses between 9 percent in 2030 7 percent in 2008 the 37 percent drop in 2008 is about as bad as it gets you'll have to look back over 80 years to the pits of the Great Depression to find annual stock market losses worse than 37 percent on the other hand over the last 80 years the stock market has returned an average of about 9 percent annually some years are really bad which causes the fear and the average reluctant investor but on average the long-term turns are pretty good given the track record of the stock market
As a whole i think most people can rationalize to themselves that investing over the long term will be financially beneficial however the fear lives in the risk of a short-term meltdown like in 2008 and yes these financial downturns do happen and ever not investing in your retirement and com in go to realize that you have to keep working in your later years seems like just a bad of a reality unfortunately hedging your bets and investing and safer lower yielding investments won't cut it when it comes to building a nest egg large enough to support you in your later years for instance consider a risk averse investor buying low yielding but relatively safe investments like short term bonds or certificates of deposit that would return about 4% over time compare the returns to a risk embracing investor who buy stocks at average 9%per year after 30 years of investing $10,000 per year the safe investor earning 4% will have 500$83,000 whereas the stock investor will have one point four eight six million dollars or more than double sure over that time the stock investor Macy'sport folio spike and dip however in the long run investing in the capital markets will be in their favor so if you make up part of the 47% of Americans who are shying away from investing or just want to become more comfortable.
With the idea of putting your money into the stock market then here are seven steps you can take to capitalize on the powerful returns this investment vehicle has to offer step one combat your fear with knowledge you've probably heard the saying knowledge is power and while this is true knowledge is also confidence and if you want to overcome your fear of investing then you need to be confident in the fact that the stock market is the right place to be investing your precious money in order to gain his confidence you need to start educating yourself on how the stock market work sand how to value the companies you want to invest in when I was first starting my own investing journey I was super fearful of losing the money I had invested at the time I was working a minimum-wage job so coming across money wasn't easy and the thought of losing it had me on edge.
However after I learned just how beneficial it is to let your money work for you I knew I had to invest what helped me overcome my fear was reading and listening to audio book son investing the book that started it all for me was the Intelligent Investor by Benjamin Graham in fact you can get the audio book yourself for free today by signing up for a 30-day free trial with audible using the link I've left in the description below then if that book isn't enough for just $15 a month you can sign up for a full membership and continue to fill your mind with investing knowledge alright step number two take it slow so now that you've acquired the knowledge you need to pick companies to invest in and how the market works in general it doesn't mean you need to throw away your life savings into a particular fund or stock in fact starting slow and investing small amounts at first allows you to make less costly mistakes as you begin to grow a san investor for instance investing just $25 a month may be where your love of comfort lies at first and then as you become more knowledgeable in what aspects of a stock appeal to you you can increase your investment contribution and start to see your portfolio really take off step 3 refine your strategy once you have your bearings in the stock market investing world it's now time to start developing an investment strategy this could involve being an active trader picking your own stocks or investing in mutual funds or index funds well there are definitely ways to maximize your returns if you can pick the right stocks most people would benefit from sticking to simple investment strategies like investing in an index fund finally steer clear of adopting someone else's investing strategy.
If you don't think it will work for you everyone has different values schools and risk tolerances and by creating your own strategy you can position yourself to make them most of your investing efforts step 4 be consistent one of the keys to investing success is to be consistent and one way to ensure you contribute month after month is to set up automated contributions through your pay many employers will allow you to set up automated deductions from your pay that will be routed directly into your investment account and use to invest further in your index funds moreover by investing consistently you gain the benefit of dollar cost averaging inessence this means that your portfolio will have a carrying value of the average cost of all the equities you have purchased so when your stocks dipin value rather than getting discouraged you can see it as an opportunity to require more stock at a cheaper price step 5 play the long game one of the biggest reasons people shy away from investing is the mental anguish stock ownership can cause when your stocks aren't performing well well it's totally natural for stocks to spike and dip on a daily basis this doesn't make the owner ship of shares any easier from a mental standpoint.
Want quick profits:-
Unfortunately many new investors want to see quick profits and judge their investing decisions based on their portfolio performance after only a month or two of cost but stocks are experience stagnancy in its growth and then all of a sudden realize exponential growth when the rest of the market catches on to just how valuable of a company it truly is once you've put money into the market you must continue to remind yourself that you are not investing to get rich today or tomorrow but decades from now and that you have roughly a century of positive performance supporting this ultimate outcome step 6 remain in emotional control like it just said stock market fluctuations are all part of the investing game but the difference between a good and a great investor is how well they control their emotions in fact people's ability to control their emotions is a major contributor to the current wealth inequity in the United States you see during the Great Recession many middle-class investors sold off their holdings even if they were in lost positions in order to recuperate as much of their initial investment as they could however many of the more affluent investors left their money in the market and over time their holdings not only recovered but have led them to accumulating even greater levels of wealth however this would never have happened.
My own experience:-
If they had succumbed to their fear of losing money and by sticking to her their investment plan were handsomely rewarded step 7 be patient in the world of instant gratification we live in we are used to having everything at our fingertip sin fact waiting has become a foreign concept for the majority of people however for 99% of investors relying upon the stock market to grow their wealth will take decades which means that having patience is a must but let's face it maintaining investing motivation year after year can be tough which is why I suggest you celebrate your investing accomplishments in a way that makes sense for you for instance every time you make a contribution to your investment account make a check mark on your calendar to indicate that you have made a positive act towards building your wealth alternatively when you hit an investing milestone like saving up $50,000 in your retirement account go out to eat at a fancy restaurant to reward yourself for all of your hard work while being patient is key to long-term investing celebrating your success along the way will make the process a little bit easier thanks for watching if you want to go from the life you have to the life thanks.
No comments:
Post a Comment