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One of the biggest frustrations I have with my friends from home and work is trying to talk to them about the stock market. It has nothing to do with talking to them about what stocks I think are the hottest and which are going to double in the next two months. It’s not even about what I’m invested in, and why I believe a certain method of investing is better than all the rest.
It’s literally just about trying to get them involved and understand the basics.
A couple of years ago I had a coworker busting my balls about how the stock market is rigged and all this crap. I’m like dude, how many Wall Street movies have you watched? If you want to learn how the stock market is rigged, go ahead and pick up the latest copy of Michael Lewis’ Flash Boys. I might actually add that to my recommendations now that I think about it. Like as part of an entertaining finance section. His books are so good. Like Liar’s Poker. It’s so funny.
Anyways, I digress.
Sure, the stock market is rigged if you’re into high frequency trading and you find out some exchanges delay orders, and some orders are received faster than others depending on how far away from the exchange you are and if that stock exchange is using the best fiber optics or not.
But who cares? That’s not why you’re here, and if you’re investing for the long haul, then a nanosecond makes no difference to you.
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So as I was saying, my coworker was badgering me about how messed up the stock market was and how it’s only for “rich old dudes”. Then he finally asked me how much I’ve lost.
I was like, “uhh well actually I made $300 today” (it was a good day, I didn’t tell him that doesn’t happen every day in a good year).
That made him pause, and I could tell that made him have even the slightest thought maybe he was wrong. After all, I’m just an average Joe who’s got some skin in the game and made a few bucks, so how rigged could it be?
And this is the exact problem I’ve noticed with so many people my age. Sure, I’ve only learned these things from books that I’ve read on my commute to and from work. But at the end of the day, that’s all it takes to learn more to enable yourself to invest more in literally yourself and the stock market.
Nobody wants to put in the time. They’d rather download the latest season of their show from Netflix onto their phone for the hour commute instead of thinking long-term about what would benefit them more. Yea, it sucks learning the basics at first when you know nothing. But then, you learned what you read, it sticks with you and it gets easier.
I remember every time I read a different book on investing and the stock market, I was making connections between each one, literally giving me an “aha!” moment at some point in each book. Reading made everything slow down; it simplified how investing in the stock market really should be as a long-term investor.
Remember, a year from now you will be glad you started.
But now, back to the rest of the world.
Like I said in my About page, my own best friends from college and high school would ask me about this stuff after they realized I was saving money, and I told them what I was doing with it.
They didn’t even know how to get started in investing in the stock market, let alone where to invest their money.
The scary fact of the matter is according to CNN Money, among people who make $25,000 or less, only 8% are invested in the stock market. Or to put it another way, 92% are not taking advantage of compound interest.
On the other hand, 88% of people making more than $1 million are in the market.
So yea, maybe you’re thinking well only 8% of those with salaries under $25,000 are invested in the stock market because their salary is so low, so they can’t afford to save more and invest it.
But the reality is it’s a common problem not just applicable to them. Apparently only 18.7% of taxpayers own stocks. Or, 81.3% of people in the United States who pay taxes do not participate in the good fortunes of the stock market.
That’s really bad when you consider the S&P 500 index’s performance for 2017 was 21.83%.
If you had invested $1,000 in an S&P 500 index fund, you would’ve made around $218 from doing nothing.
If you had invested $5,000 in the index fund, you would’ve made around $1,092 from doing nothing.
If you had invested $10,000 in the index fund, you would’ve made around $2,183 oh you get the idea.
This is literally one of the easiest ways to make money if you can be smart about it and invest in index funds.
You might think you can put it off for another few years since retirement seems so far away, but it’ll catch up to you before you know it. The next thing you know, you’re 35 and you haven’t saved a dime for retirement; and we all know how that story ends.
I even see it at work. There’s a guy that’s 73 years old and he’s working only because he hasn’t saved enough money to go into retirement, because 1. he obviously didn’t save enough and 2. he works in one of the most expensive cities in the country in a not so glamorous paying job.
According to CNN Money, the states with the wealthiest populations have great rates of stock ownership. And with that being said, the poorest states have the lowest stock ownership.
Connecticut and Massachusetts have the highest median income with one in four tax filers owning stocks.
First of all, that’s still awful. That means 75% of the people who file for taxes don’t own stocks. Think about that for a second. The majority of people haven’t been able to benefit from one of the longest bull markets in history. Who knows, by the time you read this, it could be the biggest bull market recorded in history, and you along with the majority of the country missed out on a huge opportunity.
Then we get to the poorest state, which is Mississippi, with only 10% of tax filers owning stocks and 90% owning nothing.
That’s insane to me. Considering the overall performance of the stock market is not only positive, but on average increases at a rate of 7% with dividends reinvested from 1950 to 2009, according to The Simple Dollar, that’s such a wasted opportunity.
Remember, make more, save more (DON’T SPEND IT) and invest more. It’s the surest way to get your financial freedom. Whether that means retirement or not, is up to you.
I just found out that a Harris poll conducted in 2016 showed 79% of millennials were not investing in the stock market.
Only 13% of those said millennials had the excuse they weren’t invested in the stock market because of student loans. That still leaves a frightening 66% without an excuse. The sad part is I think a lot of people have the false perception you need to have a lot of money in order to invest in the stock market.
I know I used to think so before I realized all you really needed was enough money to buy a share of a company’s stock, if that. I remember back in the fourth grade a few of my friends were in the stock market club and I had no idea what it even was. I remember my mom trying to tell me and I was thinking like what are you even talking about I just want to go play soccer mom.
Since then, and before I started to learn on my own, I thought the same thing. That it was for rich old guys and you needed a lot of money.
It couldn’t be farther from the truth guys. We make the stock market out to be this big bad monster who only rich people in fancy clothes and top hats smoking cigars seem to understand. It’s as if you need to go through a rite of passage before you’re worthy of even looking at the stock market.
It’s simply not true. It’s not as intimidating as Wall Street makes it out to be. If they didn’t, there would be no business to be had in the financial district. No money managers screwing over the average American with absurd fees.
All the movies you see based on Wall Street and the market make it seem exciting and complicated because if it wasn’t, would you even watch the movie? Who would watch a move where Leonardo DiCaprio is using the dollar cost averaging method to invest a portion of his paycheck into his 401k that goes into an index fund so he can retire one day?
Like, no thanks, I’d rather watch an episode of Bob Ross make an awesome painting of a river.
If you want to get started, one or a few of the books I have in my recommendations page is a great way to start understanding why the stock market can be your friend. The best way to be able to invest more is to make more money through a side hustle.
If you make more, you can invest more. Always use the extra cash to invest in either yourself, or the stock market to set yourself up for financial freedom and a beautiful retirement.
So what are the steps you can make today to make sure you get the retirement you deserve?
Read a book or listen to a podcast. I got into these things for myself to put myself in a great position financially. The last time I read a book in its entirety before 2015 was in high school. I’m pretty sure it was Catcher in the Rye. A longgg time ago.
Since I started in 2015, I’ve read 50+ books in about three years, and now I feel like I know more than 99% of the people in this country concerning investing in the stock market. It just got me hooked knowing I could make more the better I understood how to look out for myself financially. And now that I know so much more since then, it’s super rewarding knowing the hard work paid off.
Educate yourself on how the stock market is really supposed to be utilized for investors, not the “money managers”. Once you do that, take that extra $10 you don’t think will make a difference and save it for a later day to invest when you’re ready. Remember, you don’t need a lot of money.
When you find the right brokerage firm for you, put all that money into an index fund, and watch it grow. Set it to automatically reinvest the dividends.
Remember, the biggest advantage we all have as millennials is time is on our side. Put yourself in the best position possible by saving more than you think you can. If you automate it, soon enough you’ll forget what it was even like to have that extra few bucks. I did the same thing and didn’t even notice an ounce of quality of life drop. If anything, it got better because I saw my 401k savings grow quicker than before.
Use the compound interest calculator I recommend to see how that money you save and invest will grow over the years. It always makes such a big impression on me when I get to around thirty years or so and see how money I could make in year thirty-one, thirty-two, etc. just by letting the money sit.
Let me know what you think and what you’ve been doing to make sure you’re making your money work for you!
Do you have a side hustle that allows you to make more and invest more?
Are you thinking about picking up a book for the first time to learn how to safely invest?
Let me know!
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