One thing we know for certain: If you don’t step up to bat, you won’t get a hit!
This is a simplistic view of becoming an investor in the stock market.
If I were to tell you that across the room there was a gigantic box with junk in it that also had trillions of dollars inside (and people were sifting through the junk to find the money), would you…
A. stay where you are and ignore the whole thing (while people get the money)?
B. slowly walk over to the box at your leisure and look inside (hoping there is money left)?
C. get up, dive into the box and start looking for money?
The person in scenario (A) that stayed where they were is probably your “I’m going to just play it safe and be responsible” person. By using savings accounts, CDs and/or the mattress to stash cash, this person has been conditioned by society to work hard, minimize risks and look to the government (social security) for retirement. They keep money in accounts paying less than 2 percent annually even though the average return for the stock market is around 10 percent annually. They were always told the story about someone that “lost it all in the market.” So to be safe, their money is locked away in a mega bank that will gamble and expand on their behalf. To make things fair, that bank pays them about 0.02 percent interest for their trouble (which is actually lost due to banking fees). Other people that went to look in the box to find money may have seen your bank inside (they’re usually pretty large), invested in it and made an average of 10 percent on their principle investment annually. Which is more risky, making a bank rich with your money and hoping the government programs will help you retire? Or buying a bank (or any company’s stock) and growing your money in a historically out-performing asset class? Person (A) is not concerned. They would rather put their money in a slot machine or into a new pair of shoes.
The person in scenario (B) has been told for months or years about the stock market, yet still is not so sure. This person is walking over to the box while others are cleaning it out! They want to invest in the market but have TOO MUCH debt and very little time to invest. There are the bills, loans and other expenses that cause them to be preoccupied; thus their money comes in, and quickly goes out. When their loans are finally paid down the line, they will be in their career and ready to invest. However, they may have missed some amazing opportunities. Additionally, they have no experience (they have been working the whole time or were in school) so they get with the pro’s (mutual funds, hedge funds and the Bernie Made-off types). They under-perform the market on average, pay major fees (while making the fund holders stinking rich) and get robbed by someone promising enormous gains (just never ask how they do it)– respectively. At this point, they missed the key to investing, which is compounding interest. They start investing in their 35′s and 40′s missing 20+ years of compounded interest (translation $$$$$$). It is never too late to start investing; however more time equals more money with the exponential growth of compounded interest. As a result, those that were looking in the box take the advantage again.
The person in scenario (C) is ahead of the curve. Again, they were told there is a box across the room with junk and money in it! They got up briskly and dove into the box and began sifting through. With very little research (2-5 hours a week), they’ve manage to ignore some of the junk and find money. They realized there are many ways to invest in the stock market. They discovered a level of risk they were willing to take and bought into companies they felt comfortable owning (risk appetite). Person (C) realized as long as they are on this planet there will be some form of expenses; they were not deterred. They have managed to budget like a hawk. In doing so, they found opportunities to cut cost. In addition to cost cutting and juicing their paycheck, they learned to invest in their future and not only use their income to pay down debts of the past. Adding to the companies in their portfolio over time, and managing them regularly, person (C) will probably be able to retire years before person (B) and (A). Sometimes it’s just that simple…
Don’t wish you had done so in the future. Invest Yesterday!
Follow The Vision at MThousandaires
The contents in this article are not to be used as advice or recommendations of any kind. Mind Over Matter Investment Group, Inc. is not responsible for any actions taken with the use of this content. You should consult with your Investment Adviser before taking any actions regarding your investment decisions.
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