Recent college or university graduates with their first career job have an understandable itch to spend money after years of living on Kraft Dinner. The last thing they want to think about is saving money and building assets.
Yet this is the ideal time in life to start developing the correct habits that will lead to a comfortable lifestyle now and in the future. But what we often hear are the reasons why now is not the right time to get started. And you don't even need to watch how you spend every penny!
Here are five bad excuses for not investing:
'I know people that lost money'
Yes, investing involves risk but so does driving a car. Yet we still drive our cars! The key is to learn from your mistakes and not to make the same ones twice. Better yet, learn from other people's mistakes!
The goal is to find quality investments with lots of growth potential. In a properly balanced portfolio, the returns on the winning investments will usually far outweigh any losses from mistakes.
'I just don't have enough money to invest'
Many people assume they need a large amount such as $10,000 or more to start. The reality is you can start with as little as $100 per month. The important thing is to develop the habit of saving money on a consistent basis.
Most young people are advised to avoid taking out a loan to kick start their investments. They often don't have the emotional experience and job stability to handle the inevitable market corrections. Plus most recent graduates are already dealing with student debt and car loans.
Finally, tax refunds and birthday money are great sources of starting capital for your investment program. The point is to make saving money your top priority each month before hitting the bars or buying a new iPhone.
'Investing is too complicated'
A turnoff for people is the unfamiliar and often confusing investment jargon. The good news is you can learn the basics with some effort and the guidance of an investment professional.
Still confused? Then turning to Facebook friends for discussions over coffee can help. Always confirm an answer from several sources to ensure the feedback from friends is correct.
'I don't know where to begin'
There is no perfect way to start. There are many ways to reach your goals. That's why finding your options isn't the hard part, it's picking one. Getting started really comes down to two options: do everything yourself or pay a professional to do it for you.
Your priorities in life will determine your course of action. Will you have a lot of free time for managing your own portfolio or will you focus on building a career, traveling or raising a family?
Economic progress has been marked by specialization of labour over the past century. Most people have the brains to do their own investing but not the patience or passion to do it as well.
If you do want to experiment, then use a free internet portfolio simulator to test your knowledge without risking real money.
Otherwise have a professional do it for you. What you're really getting is someone who has invaluable experience and will help you avoid beginner's mistakes.
Think about it
Young people just starting out in life have a big advantage on their side: time. Combining that with regular savings and patience will help win the investment game. The goal is to become a competent investor.