Most of us have the most basic understanding of finances. We work hard to earn our money. We use that money to pay our bills, buy a house, pay for our kids’ education, and whatever is left over we put in the bank to save for the “future,” whatever that means. But we all know there is another world out there. A world with people in nice suits and fancy cars. People who seem to know how to get their money to work for them. The people of Wall St. We don’t want to be like them. Most of us just want to lead simple lives but, man, wouldn’t it be great to be a little like them? But there’s no way. There’s just too much to learn and it requires skills we just don’t have, right?
No. That kind of “I don’t belong” fear is what prevents most people from investing. Here’s what you can do to get over it.
Start learning
You want to get over your fear of investing? Learn how to invest. It’s not as hard as you think. You don’t need an Ivy League education to become a wise investor. You can teach yourself by buying a few books. Just Google, “top rated investment books for beginners,” and you will see many options to choose from with detailed reviews. There are also websites dedicated to the subject such as The Balance, Bloomberg, and Yahoo Finance. Teaching yourself how to invest is easier than you think.
Realize you are just as wise as everyone else
Remember those Wall St. people with their fancy stuff? A lot of them go on TV to talk about “dividend plays,” and “price to earnings multiples,” and whatever highfalutin terms that don’t make sense to us. They obviously know something we don’t know, right? No. Believe it or not, most investors under-perform the market. That means if all you do is put money in an index fund and do nothing else for the next 20 years you will have outperformed most investors. Seriously. Why? Most investors are really bad at timing. They buy when they should sell and sell when they should buy. Does that mean you should just put your money in an index fund and forget it? No, there are a few really good investors who consistently outperform the market. Learn from them. Buy their books.
Go with what you know
You might not know which pharmaceutical company might be developing the next great cancer drug, but maybe you love watching movies on Netflix, or eating at Chipotle. Behind each great company you love there is a stock that you can invest in. Do some homework on them and invest if their future looks bright. You’ll feel more comfortable investing in companies you understand than ones you don’t.
Remember, investing isn’t a members-only club. You belong. Go out there and buy wisely.