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Why aren’t people investing? Are you nervous about making your first investment? Fortunately, today’s guest post from Just Start Investing and highlights the significant role that investing plays in our financial journey. The best time to invest was yesterday, but the second best time is right now. Enjoy!

Investing, in my view, is a basic right. Thanks to John Bogle, anyone can throw $1,000, $100, or even $10 into the total US stock market and benefit from the long term returns (historically this has been around +7%).

Despite this, so few people take advantage of the investment opportunity in front of them.

According to data from the Federal Reserve and FDIC, the median household savings (in savings and retirement accounts) is only $11,000. Worse than that, about 30% of households have less than $1,000 in savings.

Why are so few people investing in their future?

It’s an interesting question. The answer is a mix of a couple of factors (all of which can and should be overcome) that we’ll dive into below.

The Importance of Investing

First, let’s confirm what investing is and why it’s so important.

Saving the right amount of money out of every paycheck is usually not enough. You must be investing this money smartly in order to reach your retirement (and other financial) goals.

The best way to illustrate the importance of investing is through a couple of examples. Let’s say you have $40,000 on hand right now. On top of that, you save an additional $10,000 per year. Here is how your money would grow over 40 years sitting in a high yield savings account (at 2% growth) vs an S&P 500 index fund (at 7% growth).

Pretty stark difference! The S&P 500 fun grows to be more than 3.5x larger than money saved in a savings account.

This makes it clear that investing is necessary to grow your money.

Furthermore, investing now is key. With the same S&P 500 scenario, here is what happens to your money if you start now and invest for 40 years vs if you wait 5 years to get started (and only have 35 years for your money to grow).

You’d be left with $600,000 less money if you waited 5 years to start investing in this scenario.

Alright, so we’re on the same page: investing is good and investing now is even better. So why isn’t everyone investing?

Reasons (Excuses) for Not Investing

People give a lot of reasons for not investing. I used some of the same excuses just a few years ago. Below are some of the top reasons with the explanations usually associated with them. Further below, we’ll dispel these excuses.

1.) It’s too hard

People always think it’s too hard or complicated to get started. Or, they don’t think they have the knowledge to invest on their own and don’t want to deal with a financial advisor.

2.) It’s too risky

People think the stock market is volatile (which it is, in the short term). Everyone is afraid to lose half their money, like in 2008.

3.) I’ll get to it eventually (otherwise known as: I’m too lazy)

People will say that investing is on their to-do list, right after they finish their favorite show on Netflix.

Just Start Investing Story: What Held Me Back

A few years back I was in camp #3. I knew I should be investing, but had more money in a savings account that in my brokerage account, Roth IRA and 401k combined. Plus, of the money I did have in investment accounts, it was in individual stocks rather than index funds.

Why? I was too lazy to optimize everything.

Luckily, I had some friends remind me of how great the market performed from 2011-2015 and what I missed out on by not investing (and investing in index funds). This was actually unlucky for past me, but lucky for future me.

Seeing the opportunity cost of my actions (or lack thereof) is what helped me get over my reason for not investing and set me on the right track to get everything optimized.

How to Overcome Your Excuses and Just Start Investing Today

The best way to overcome any fear or laziness that is holding you back from investing is to use logic. Just take a second, and dive into the reason you have not started. When you think it through, you’ll see that the reason does not have a lot of merits.

1.) It’s too hard

Investing on your own has never been easier!

For one, in a matter of minutes, you can have a brokerage account open.

Second, with the rise of index funds and ETFs, you don’t have to spend a ton of time researching or picking stocks. You can find leading index funds with rock bottom costs from brokers like Vanguard and Charles Schwab and have a diversified portfolio with one purchase.

2.) It’s too risky

Yes, investing is risky, but only in the short term. Let me remind you of the chart above that shows what your money does over 40 years in a savings account vs the S&P 500. If you have any faith in the US economy to grow (which many experts do), then investing will benefit you in the long run.

The real risk is the opportunity cost of not investing (and missing out on the 3.5x return in the example we walked through earlier).

3.) I’ll get to it eventually (otherwise known as: I’m too lazy)

Take a quick peek back at the last 10 years. Hopefully, this has not been an excuse for that long, but if it was then you missed out on a potential 3x return on your money. The S&P 500 grew from ~850 to ~2,700.

Every day you wait is less money in your future pocket. You should start now to maximize the amount of time your money (and compounding growth) can work for you.

Author Bio: Just Start Investing is a personal finance website that makes investing easy. The company focuses on the simple strategies that help you get started today so that you don’t miss out on future returns. In addition to investing, Just Start Investing offers tips and advice across credit cards, banking, budgeting and all things personal finance.

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