We talk to a lot of people over the years, and one of the topics that we at Saving For Hope feel like there is still a sort of “enigmatic feel to it” is investing. There seems to be a lot of misinformation about investing out there. A lot of people think that for you to invest you need to be educated, smart, connected, and have great “tips” from “inside sources” that will help you get rich quick. Not to mention, there is always the never-ending excuse: we just don’t have enough money to invest!
In this article, we wanted to target the 3 biggest misconceptions about investing and give you useful practical tips to get you started quick.
First, let’s tackle the 3 biggest misconceptions about investing:
1- Not enough money. This is the most common excuse people have not to invest. The claim always goes like this: we live paycheck to paycheck, so there is not enough money to invest. You can break out of this mindset if you really make investing a priority. Putting money aside for retirement, having a house, or for kids to go to college are all good investing strategies. They are more future focused and a must for every solid financial plan. You can also have a more immediate goal in mind, like making a bit extra income me every month, or having a diversify strings of income. Whatever your goals are, make sure you make it a priority.
2- Not enough knowledge or time. This is the second most common excuse people have not to invest. The claim always goes like this: we are so busy, we don’t have time to research and/or invest. For you to breakout of this bad habit, you must make sure you do three things: a- have a budget (and follow it) this will help with the first excuse as well, b- live according to your means which will help you save and c– dedicate time to learn and act. If you do this, you will ensure that you have enough money and time to do the things that are priority for you and your family.
3-It is too risky. This is always the one that makes me laugh the most. We face risks daily and don’t even think about it. We drive, shower and go to the beach, all are activities that carry risk. Investing is risky, sure! But you know what is even worse? Not having money to live when you are 70. That is risky as well and yet people still use the risk excuse!! Get rid of it! Think about the rewards instead of the risk. Think about having a financial plan instead of loosing money. Risk can always be mitigated if you have a solid plan. Everything in life carries risk and it is not guaranteed (except debt and taxes as some people say).
Second, lets consider some reasons as of why investing should be a part of your financial future.
If you want financial freedom (who doesn’t??!!) then consider this: you cannot avoid investing! Period. You need to understand that investing is, should be, and will be a part of any solid financial plan, regardless of your situation. Click To Tweet There is no way around it. If you have a 401-K, or any retirement plan, that is based on investing, if you have mutual funds, that is investing, if you are saving for your kids college, that is investing. Investing is the foundation to any financial plan. The problem is that most people don’t understand this key element and they panic when people even mention the word. Fear, ignorance, and other factors play a part here, of course, but the bottom line is that you can protect yourself, your family and your investments/assets in the future.
Third is the fund part!
If you already passed the fear of “not knowing what to do” part, let’s get to investing like there is no tomorrow!! (not literally, that will be bad for investments).
For you to start investing, you need an investing platform that will allow you to buy and sell into the stock market. There are hundreds of platforms out there. Most platform that are popular (like E-trade (Ameritrade now), Fidelity, Charles swab, etc. usually charge you money to invest. Platforms fees range from $4.00 to $10.00 per transaction. However, there are a few investing apps out there that do not have trading fees. That is right!! They are FREE!!! We recommend apps like Robinhood, (sign up today and get a free stock! No catches) Acorns, etc. that allows you to have control of your money and trade for free. It sounds like it is not a big deal, but it is.
Let me explain why. Let’s say that you read this article and want to start investing. You sign up with Ameritrade and put $100 down to start. If you do 3 transactions (let’s say you buy 3 stocks on 3 different companies, you like) you paid them around $21.00 ($6.95 each, which is the current rate for one of them, as of today) for those transactions. That is 21% of your money!!!!!!! I am not great at math, but that does not work for me. If you invest with a free app, you keep 100% of your money. Over time that money will make you, and that adds up quick Click To Tweet.
Finally, here is what you need to do: 1- Download a trading app (like Robinhood or Acorns. BTW we are not affiliated with either nor make money from them!), 2- Create an account. It literally takes less than 5 minutes to do so, and all you need is basic information about yourself. 3- Link a bank account to it. if you have your bank app on your phone it is super easy to do so, and it takes 5 minutes. 4- transfer money to it (there is no minimum to transfer, you can $50 or $5,000) and start investing. You literally can start investing today for FREE with less than $100. (as promised).
If after you get set up, you want to have more info in what to invest and when to buy, stay tuned for our next article. We can simplify the process and give you a few tips in how to get started. But first, break out of the poverty cycles and start your plan today. Enjoy!!!