Convince me to invest money
I have severe anxiety, grew up poor and have someone in extended family who lost everything they had in the stock market. I know I'm losing money keeping cash but I setup a vanguard once and pulled out within days as it gave me sleepless nights. How can I get over this fear? What are safe options to invest which can be made liquid easily. We have a mortgage but save some every month now, recently paid off other loans. #personalfinance #investments
Index fund. Just look at the historical data. As long as you don't need the money for short term and can ride any downturn, chances are your money will eventually grow.
It’s seriously that easy. Commit to DCAing some X amount every Y period. Whether market goes up or down in the short term, you will win in the long term.
Look at rate of inflation and convince you need to at least beat it to break even. Avoid individual stocks. Look at long run trends of major indexes/ETFs. Use automated investment (don’t so it actively) using robo investors with recurring investing setup. Don’t look at it often. Treat the investment money as not for spending (have a savings account for those) but for long term. Hope these help you get started. There’s sure some inertia but hope you’ll overcome it.
Thanks
FIAT money looses value with time because governments can print it at will (inflation). Investments work for you so you don’t loose money. You can also buy assets that cannot be printed (certain cryptos, gold …) where the price depends on supply and demand only.
Assume 2% of every pay check doesn't exist. Put that money in stock market (like in a stock that's going up like Apple and Microsoft) . It will help you ease into investing. Once you get used to putting X amount it will push you to put more and help make better use of money
Thank you, this sounds doable
This except choosing individual stocks. Just because AAPL and MSFT has done well doesn't mean it'll do well. So don't try to play market, that's a fools game. Choose some low cost index fund or use robo investor like wealthfront, betterment and put some money every month from paycheck assuming it doesn't exist for expense and be disciplined about it. Only invest you can afford so you don't need to liquidate at wrong time.
Warren Buffett is having his heirs invest in an index fund that tracks the sp500. The logic behind is pretty sound; most active fund managers underperform the sp500 in 10 years and almost all of them underperform over 30 years. Having average returns actually outperforms almost every well educated fund manager in the long run since it is hard to consistently beat it. If you have no interest in managing your fund a fund like VTSAX (vanguard) or FSKAX (fidelity) can automate the investments from your bank and is pretty safe since you are buying a piece of 3000 American publicy traded companies (with the FANG companies making about 20% of these mutual funds). The mutual funds or indexes are a self regulating living organism that changes with time. Yes you are buying losers but you are also buying high flying winners which makes all the difference with 10+ years of compounding. The key is to not look at your investments often if you are emotional about it and to let time compound. Since you are automatically dollar cost averaging into the market, even if the market crashed over 50%, you would be buying for very cheap prices through automatic dollar cost averaging and over the long run will get around a 10% annual average return in a 10+ year time span. Also since you're not timing the market you avoid tax hits from constantly buying and selling. Fidelity has a great study about how the best retail investors are all dead because they buy and hold FOREVER.
too much text
Thanks @Google. I can see the benefit. Just get a lump in my throat everytime my spouse brings up investing in market
Start with 10% and see what happens, if it's performing well over time then add more.
What's the fear. Look at the data and every wealthy person ever?
The person that lost everything was in some concentrated positions, maybe some kind of meme stock at that time. Owning all of the world's stocks has a completely different risk profile - think what would have to happen for all companies in the world to crumble. At that point your money doesn't matter, only your bunker and ammo matters.
Poor mentality: Make some greedy, ill-informed plays (especially options), lose a ton of money, never touch financial instruments again Wealthy mentality: Make some disciplined, diversified investments, hold for long periods of time, sell only when necessary
By holding cash, you’re earning peace of mind. Nothing wrong with that.
[Update] thanks for elaborating your comment. I live in a high col place and eventually prices catch up with increasing spending capacity. I know I will lose out soon if I can't keep up.
+1, holding cash only lose value with inflation, nothing else. I used to lose 300K due to bad investment strategy, really wish I kept them as cash. Also, any gain from stock market is subject to tax, but not the same for loss.