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Busting Investment Myths Holding You Back
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Mar 1, 2024
#money #investing #blackexcellence Investing was once considered to be for the super financially sophisticated but it doesn't have to be. Are any of these 6 investment myths holding you back from making great financial progress in life? WATCH these recommended videos on investing: How to invest your first $1k: https://youtu.be/mqDuVYV26zg?si=_7x7EBeZyjBeuC0A What's Index Fund Investing?: https://youtu.be/Nd_3I8sCCKc?si=X2Zg6MlRiKjHMdJW Do THIS to get rich in a recession: https://youtu.be/3SRXaDoB8OU?si=chB-68Him0SI91Nz How Much To Save At Every Age For Retirement: https://youtu.be/zy1bBUbll38?si=Fe8EOoxwRRj8WMZ3 Check out the books we love and recommended in our Black Excellence Book Club: https://www.blackexcellence.com/store/ Some links are affiliate links, which means we earn a very tiny commission if you make a purchase. __________________________________________________________
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We recently did a video on how to invest your first $1,000
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But I know a lot of you will be reluctant to get started on investing
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because there are some investing myths you're holding on to. I'm going to talk about six investing myths that are holding you back
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from making great financial progress. Real quick, before I get into this video
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I just want to let you know that this is not investment advice
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These are just tips and tricks that I have learned from reading tons and tons of different books
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The first crazy excuse I hear everybody saying is that you need
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a lot of money to start investing. Years ago, investing used to be
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an activity left mostly to those who read the Wall Street Journal or had financial advisors
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But in recent years, thanks to the power of the internet and social media
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investing for the most part has been demystified. But one myth that
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a lot of people are still holding on to is that you need a lot of money to start
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investing. That is completely not true. You can start investing with $50, $100, or
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even $1,000, whatever you have to get started. I believe that there's websites and apps where you can invest your extra change
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even. I always say if I can go back in time, I would get started on investing right when I started
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working in my teens with whatever little money I had. If all you can afford to do is transfer
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$100 a month into an investment account with one of the brokerages like Fidelity or Schwab
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then that's a great start. You don't need to amass thousands or millions first to be an investor
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Investing what you have first is how you get to the $1,000. and eventually the millions
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And yes, I know that there are stocks or index funds that are priced way higher than $100
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But there are also those that are priced lower than $100 per stock, and you can get started with those
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Of course, you've heard me say a million times I prefer index funds, which is a collection of different stocks, all rolled into one group
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But if you only have $100 to get started with, you can transfer that every month until you have enough to start buying index funds like the S&P 500
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The next thing that I'm always hearing is that it's safer to keep my money in a savings account
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If you're one of those people that are so in love with their savings account
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you love to check it every morning and every night and make sure that your money is always safe and cozy for you
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Anytime you want to access it, you not thinking about that one problem that one little sneaky thing that called inflation Inflation is that little thing that eats away at the value of your money silently as it sits in your bank account And I mean if you not aware of inflation in the last three years and the price that even a McDonald burger has gone up
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then you probably don't even need to be watching these videos because you're in the upper, upper class
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In an average year, and we're not even talking about the last three years where inflation went up by 9%
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Inflation has gone up by 2 to 3%, which means your purchasing power on your money has gone down
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by the same percentage. That means that the price of everything from groceries to rent to cars
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goes up slightly higher every year. If your money is sitting in your savings account where most of the
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time it earns a less than 1% interest rate, I think it's like 0.00 something percent on the money
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that you have in there, then it's not keeping up with the rate of inflation. That means that the
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$100 that you left in your savings account will be able to buy less next year than it is this year
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I bet after knowing that, you're looking for a solution. And that solution is either figuring out a way to invest your money
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let's say in the stock market or opening up maybe a high yield savings account
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The stock market doing it the way that I suggest by buying index funds returns about 6 to 8% in an average year
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Another option is high yield savings accounts. Right now, since interest rates are high across the board
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it's easy to find high yield savings accounts offering around 5% interest rate
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on money you put in their savings account. But, of course, that might not always be the case as interest rates start to fall
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So I believe the better bet is investing in the stock market and investing wisely
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meaning diversifying your investments by buying index funds instead of individual stocks
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Next up, we have the people that believe investing is too complicated
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Some people I come across and I don't want to name names will start dozing off when I start
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to talk about investing in the stock market. They either think it's too complicated
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complicated or too boring to keep up with the conversation. The thing is investing is not complicated and you don't have to bebrored doing it if you have
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the right mentality of set it and forget it. You don't have to check on it every day, every month, there are ways to automate your
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investments and just forget it. Let the money work for you. And as far as it being complicated, there is a ton of information online
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For instance like the videos I make that explain how to invest where to open up an investment account and what to invest in All it takes is some effort and you find investing is not complicated if you do it right It actually really fun
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And number four, so many people believe you have to pick the next big thing or the next big stock
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You probably heard all the stories of people investing in companies like Apple or PayPal or even Bitcoin
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that when they first started and now they're multimillionaires. All because they picked the right stock and held on to it for years and years
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So from those stories, you might be thinking you have to be either a genius or super lucky to pick the next big stock to be a successful investor
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And that can be further from the truth. You don't have to take a major gamble on one stock to be a successful investor
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Actually, so many people that pick stocks for a living that try and pick the next big thing fail when it comes to investing
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So that's why I would highly advise against trying to even find the next big stock
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For every Apple or PayPal, there are hundreds of companies that fail every day
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I mean, a lot of you have either lived through it or just barely remember the dot-com bubble of the late 1990s
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and the recession that followed because most of those dot-com companies failed
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I mean, trust me, especially if you're new to this, don't put all your eggs in one basket
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Diversify your investments by again, and I sound like a broken record, investing in just an index fund
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and doing that month after month no matter what happens. After you learn about investing and have read up on how stocks work
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and you completely understand everything and you want to invest in one company that you absolutely have faith in
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then go ahead and buy that one company. I'm not completely against it
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but the majority of your money should still be in index funds because you're never sure about what could happen in the future
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or what one crazy CEO does, and you could have a million dollars in that company
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You're freaking jet skiing in Hawaii, and that investment goes from a million dollars to
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freaking nothing because a CEO makes one big mistake. At number five, we have investing in the stock market is too risky
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If you came into full adulthood in the Great Recession around 2008, you might be scared
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for life about investing in the stock market because of all the financial devastation you saw
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A lot of people were running around saying that their retirement accounts were wiped out on top
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of people losing their jobs. That was a very traumatic time for all of us but that was damn near a depression They don call it the Great Recession for nothing Those type of recessions don come around that often Historically it has taken the stock market from two to four years to recover from a recession
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That might seem like a long time if you're living in it, but it actually isn't a long time
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in the long term of 10 to 20 to 30 years. I can tell you right now that there will be those dips where you lose money, but there will be highs
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like last year where the stock market returns 24% on your money
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That makes the average stock market return 6 to 8% accounting for the high highs and low lows
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which means investing in the stock market, and when I say stock market, I'm referring to the S&P 500 is not a risky move based on history
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And lastly, something I want to tell everybody I know is I or anyone you know can't time the market
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Is this a good time to buy? is a question I get from so many people when they're finally ready to jump in
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Most of the time, my answer is nobody you know or I know know know if it's a good time to
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buy or not. It seems obvious to buy right after the stock market has crashed and a ton of
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stocks are at a great discount. But the truth is, they can keep going down too from that point
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On the flip side, it might seem like the stock prices are too high to jump in, but like last
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year, they could just keep climbing higher and higher, making you wish you had bought when
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you first considered buying. Even Warren Buffett says all the time that he, the very best investor of all time, can't
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predict if the stock market is going up or down. So if he can't do it, nobody knows for sure where the stock market is headed at any point
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in time. That means that you shouldn't even be worried about timing the market
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There's this beautiful little phrase that I love to say all the time called dollar cost
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averaging, which means you keep investing whether the stock market is up or down. In the long run
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that has proven to be the most effective and stressless way to invest. So I know I have addressed
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at least one, but hopefully more of the investing miss that are holding you back from investing
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Let me know in the comments if there are any other ones that I didn't address, but you have
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questions on and I will love to respond to you right below. Like I said before, the best time
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to start investing was decades ago. The next best best thing. time is today, so don't waste any more time. Get into the game now. And that's all I have for you
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today. I will see you next time with more Money Talks
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