Your First Investment Doesn’t Have To Be Perfect
“I know we’re not perfect, but the safest hands are still our own.” - CAPTAIN AMERICA: CIVIL WAR
written by Christopher Markus & Stephen McFeely, directed by Anthony Russo and Joe Russo
(3.5-minute read)
If you’ve never invested your money before, it can be stressful. You’re probably worried about losing it. You may be concerned that your spouse will blame you if it doesn’t go as planned. You don’t want to disappoint a loved one so you’re understandably nervous.
Here’s a tip that may ease your anxiety: your first investment doesn’t have to be perfect. Fretting over what, where, and when to invest can paralyze some people. You may never take action because of all these unknowns. You have developed…
ANALYSIS PARALYSIS
Yeah, the act of not acting has a name. Some people are so overwhelmed with all of the research that they fail to invest. You can go so far down a rabbit hole of possible investments that you don’t know what to do. You become paralyzed, not necessarily by fear, but by the sheer amount of analysis that’s out there. There is so much!
You may enjoy reading all of the reports. Math might be something you’re good at so the numbers intrigue you. This investment averages a return of X percentage over the last ten years, but this other investment pays a monthly dividend. Hmmmm, what to do? And, hey, look at those charts! That pie graph looks nice!
You compare all of these numbers and charts, but then you look up a month later and you still haven’t invested a penny. There’s more research to do! At some point, you have to end the research and make a decision.
Try not to spend all of your time analyzing every detail. In fact, there are professionals who do that on your behalf. If you’re investing in the stock market, for example, Portfolio Managers are the ones behind the scenes of a fund, digging into the numbers. I’m not saying these people are infallible, but they’re poring over the analysis of the companies they’re selecting for the portfolios. If you’re buying real estate, there are people who analyze those properties for a living, too. Lean on the professionals to help make a decision, not your cousin’s neighbor.
FEAR
The biggest fear investors face is losing all their money. Nobody can guarantee a loss on investment… except one. The United States Government.
The only investment that is called “risk-free” in the Financial Industry is a United States Treasury. Most people don’t even refer to these as investments because there is no risk. So if fear is stopping you, then the best way to dip your toe into the investing world is to buy a U.S. Treasury Bill. There are Bills, Notes, and Bonds, but this blog isn’t about the details. Just know that all three basically behave the same way, but their main differences are how much they return and when they pay you back.
But if fear of losing all your money is a concern, then you don’t have to put all of your money at risk. You can start with a small amount. If you’re still afraid of losing that small amount, then perhaps investing is not for you. Just move on and buy a Treasury Bond.
But you should know that putting your money into an investment has a risk. If you don’t need this money for a long time, then you might be able to tolerate the fluctuations. The stock market has a tendency to rise over time. The short-term may see your account go down, but over the years the S&P 500 rises and, with it, account balances.
LEARN FROM YOUR MISTAKES
I invested in a rental property many years ago. I also started investing in the stock market around the same time. I made mistakes in both. But I learned an awful lot about investing along the way.
You will too. It’s okay to make mistakes as long as you can afford it. Your first investment won’t be perfect. But, then again, what is a perfect investment? It’s subjective. So, whether you want to start with a small amount of money, or you’re ready to dive in, just know that you will probably make some mistakes. Learn from them and try not to repeat them.
Lastly, there is a famous saying that I repeat to my clients, which is, “It’s not about timing the markets. It’s about time in the markets.” So instead of trying to get in at the right time, usually the most important factor is how long you’ve been investing. Starting today is almost always better than starting tomorrow.
If you’d like more information about investing, you can schedule a complimentary meeting HERE.
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