It always surprises me that so many people are sitting on the sidelines of the stock market.
They want to start investing in stocks, and they participate in various Facebook groups, listen to investment podcasts, and read relevant blog posts… but they don’t buy any stocks.
They are so ready. It’s just a push of a button.
It’s probably the same reasons that prevent us from doing many other things in life.
It’s the fear that something might go wrong.
This is where people might tell you to ask yourself what’s the worst that can happen.
I think you need to ask another question.
You need to ask yourself:
“What if I never start investing in stocks? What happens then?”
Because that’s what you should really be afraid of.
I’ll try to answer that question in this blog post:
1. You’re Missing Out on a Future Fortune
The first answer is that you’re missing out on the fortune that your savings could grow into.
The other day I read about someone who had invested $50,000 over five years and made it grow into around $200,000.
I know another woman who has gradually invested all her savings since she graduated from college, and over a decade she built a portfolio of more than $2 million.
No inheritance, no money from a house or divorce. Just savings from a pretty average academic job and the magic of compounding over a decade.
So this is the first thing that will happen if you don’t start investing: you miss out on becoming a self-made millionaire.
2. Your Future
The second answer is that you’re missing out on the future you could create for yourself and your loved ones with the fortune you’re not building.
Money isn’t just money. Money is another possible future. Money is plenty of choices. Money is freedom to live a life of your choosing.
Maybe your goal is to work less.
Maybe your goal is to make sure your children are financially safe in the future. To create generational wealth.
Maybe your goal is to be able to move to another region or country and create a new lifestyle.
Or maybe your goal is a mix of all the above: moving to another country, having the time freedom to enjoy it while feeling sure that your family is financially safe now and in the future.
I recently moved to Portugal with my two small boys. I have the freedom to work whenever I want and take breaks whenever I want. After moving, I took three months off to give us time to get settled in a new place.
I can give my family a lifestyle that most people can only dream of. Over the summer, my boys, aged 5 and 8, have learned to swim, ride a horse, play tennis, and sail. If I hadn’t invested in stocks, this wouldn’t have been possible.
3. You’ll Probably Spend the Money
If you keep your savings in cash in an account ready to spend, you’ll most likely do exactly that: spend it.
The biggest danger to your savings is spontaneous and unnecessary consumption.
Cash is too easy to use, and most people will start buying stuff and experiences they don’t really want or need, like home decor stuff or weekend getaways they are too tired to enjoy. They’ll buy it just because they can.
4. Negative Interest Rates and Inflation Also Eat Up Your Money
Even if you have the discipline to leave your savings in your account alone without spending it, your money will still slowly trickle away.
In this current market, there are negative interest rates (at least in parts of Europe), and that eats up some of your money.
Not to mention inflation will also take a serious slice of the pie.
Did you know that with an inflation rate of 4%, your money will only be worth half of that in 18 years?
Let’s say you’ve saved $100,000. It will shrink to a value of $50,000 after 18 years.What will that do to your child’s savings for a future education?
5. You Lose Confidence in Yourself
The problem with wanting to do something and not acting on it is simple:
It erodes your self-confidence.
It’s important that we do the things that we set out to do so that we can continue to trust ourselves.
If you had a friend who didn’t show up for an appointment, what would you think the next time you considered inviting him for dinner?
You might think that he probably wouldn’t show up anyway.
Maybe you wouldn’t even feel like inviting him.
Do you want that kind of a relationship with yourself?
When you want to do something and you know it’s the right thing to do, then do it. Keep your word – to others and to yourself.
Otherwise, you are undermining yourself.
Familiarize yourself with investing – read the blog posts, listen to the podcasts, take an investing course – and then get down to doing it.
Obviously, you are also going to read my e-book Free Yourself, which you can download right here.