1. Investing is so intimidating and it’s only for finance people
Ok I will admit, it can be. After all, not all us has a finance degree and the amount of jargon that is used can be daunting. Not to mention the different types of investment.
I obviously had the benefit of graduating from accounting and working in the investment industry. So it came more naturally to me but even then I’m still learning.
So what can you do about it?
Self investment which is invest in knowledge. There’s a famous quote that says “Investment in knowledge pays the best interest.” And it’s true right? Because you don’t have to be dependent on someone else. There’s plenty of resources out there; from books, education courses and with the internet; there’s no shortage of resources. Of course, there’s the challenge of sifting through the information and not to mention the “noise” in the market. So my take is this; kiss it simple, stupid (KISS) – understand the basics and start with baby steps. You don’t need to know EVERYTHING to start, so don’t get stuck in analysis paralysis.
Of course you can get professional help. Because self investment is built over years. And for some, the truth is investing can still remain a foreign language no matter how hard you try to understand it. After all, for some of us who can’t bake, we buy a cake or when we can’t fix our own car, we go to the mechanic. Drawing parallels, when we need some help financially, going to a financial planner is definitely an option.
2. I need to have a huge sum of money to start investing
Yes certain investing requires larger amount to start such as blue chip stocks, direct buying of bonds or property. But guess what, options such as roboadvisor and unit trust are good entry points with as little as RM1,000. Plus you get good diversification within that. Hence you don’t need to have loads of money to start. Contrary, I always say this, it’s because I don’t have a lot hence there is more reason to start.
3. Fear of losing money
Some of us definitely dislike risk more than others. And the word investment is associated with risk. Truth is risk exists in our day to day lives whether we like it or not and we can’t completely avoid it. In fact not investing in itself is actually making you lose money. How you might ask? Because if you only save, the rate of inflation is higher than our savings rate. This automatically makes the value of our money decline over time.
So once again, knowledge can really help remove that fear because it helps you understand the risk involved and what factors affect influence your investment. Knowledge does help to build confidence. Also some facts that can help put investing in perspective. See the two charts down there – the line is mostly on an upward trend isn’t it? And guess what they are. They are the stock charts of the US market and the Malaysia market. In reality, while there are downturns, the market has overall being trending up. While it is no indicator of the future, history can indeed give us some confidence.
4. Mistrust of anything financial
It is common to hear of scams in the market or it could be stories from family members or friends who have invested before but have lost money. This can make some of us have wariness about the financial industry and even think that some professionals are unethical. While I won’t say these don’t exist, this are more the exception rather the norm. So some tell tale signs of how you can avoid these scams or unethical people:
· They tell you it’s guaranteed return
· It’s too good to be true
· They use high pressure sales tactics and discount other offerings, claiming that they are the best
· They don’t like to be ask too many questions
5. Always waiting for the “perfect timing”
We all like a good deal don’t we? And this means that we like to buy when the prices of our investment drops and wait for that “perfect timing”. Now I’m not saying this not a bad tactic completely; it can happen for property and commodity. And of course it’s also wise to consider when stocks are overvalued. But for some, this can result in inaction for a VERY VERY long time or no action at all. If you look at the charts above, you will see big market corrections only happen once in a few years.
There’s a chance you have lost out on investment gains in those years. And more than that you would have lost on the chance to actually learn and build your confidence. Time in market (meaning how long you are invested) ultimately is better than timing the market. Read this article here to find out more https://www.cnbc.com/2021/03/24/this-chart-shows-why-investors-should-never-try-to-time-the-stock-market.html Hopefully this helps you all overcome your mental barriers and help you start on your investing journey.