This guest blog comes from our friends at Moneycube.ie, a leading provider of online investment and pension advice. In it, co-founder Ralph Benson looks at the excuses we make to ourselves for not investing.
We’re all guilty of it: making decisions based on gut feeling and finding the facts to fit. Investing’s no different. The investing game is full of facts and figures, but starting to play is an emotional decision. And the choice to stand at the sidelines is driven by sentiment too. Here are the five worst reasons people tell us they’re staying out of the game – and how we can convince them to play ball.
1. Investing’s not for people like me
This one never dies. Despite all the hard work from educators like MyWallSt, low-cost brokers, not to mention the army of retail traders we’ve seen in 2021, it’s hard to dispel the sense for some that ‘people like me don’t do stuff like this’.
Often, people look to family for a cue here. If your parents never invested in stocks, you’re less likely to jump in yourself.
But have the courage to be different: just because your Dad is wearing 1980s Levi’s doesn’t mean you can’t proudly put on your upcycled super-baggy jeans.
2. The market’s too high
Fact: markets rise over time. That’s why the headline that ‘markets reach record highs’ is so misleading.
What’s more, every single fall in the market has been followed by a rise in the market. And the rises tend to be bigger than the falls.
It’s true that markets have responded strongly over the last 12 months as governments have supported individuals and companies, science has produced answers, and investors have made sense of a global pandemic. But being late for kickoff doesn’t mean you should avoid the game altogether.
3. I prefer property/crypto/tulips
Then there are those who prefer other assets over stocks. Fair enough (possibly with the exception of the tulips, that didn’t end well last time).
The point here is that it’s not an either-or decision. In fact, spreading your wealth across a wide, but manageable range of industries, geographies and asset classes is age-old advice. You wouldn’t bet the farm on a single crop – so don’t bet it on a single property or cryptocurrency either.
4. I can’t afford it right now
This one’s simple. It’s never been easier to invest small amounts of cash, whether via fractional share dealing, trading apps, or into highly diversified funds.
Of course, there are times it makes sense not to invest – for example, if you’re clearing expensive debt.
In reality, a lot of people making this claim are really telling you they have other spending priorities.
5. Investing is too risky
On closer inspection, this is really a version of (3) above. Investing in stocks is just too risky for those who prefer cash (or property, or crypto, or whatever).
What’s really meant by risky here? Typically, this is a worry about weathering short-term dips in investment performance. But if – as MyWallSt recommends – you’re thinking long-term, diversifying across different markets and sectors, and investing what you can afford, then fear of short-term noise is a poor reason to put off taking the plunge.