Advertising
Advertising

Many People Think That Investment Is Risky, But The Fact Is It’s Risky Not To Invest

Many People Think That Investment Is Risky, But The Fact Is It’s Risky Not To Invest

You might think that now is not the right time to invest because you really don’t have a lot of money. However, that’s a common misconception that could jeopardize your financial future.

The best time to invest is when you’re young, because your money will have more time to grow. An early strategy of consistent investment will give you a nest egg later on in life that you can use for major purchases or, better yet, retirement.

Here are some common misconceptions that millennials have about investing.

“The Stock Market Is Too Risky”

You might think that the stock market is just too risky. You were around when the financial markets took a nosedive in 2008 and perhaps even noticed how it affected your own family. You’ve read about the great stock market crash of 1929 and you’re certain that you don’t want to park your money in stocks with an uncertain future.

While there’s no doubt that the stock market crashed decades ago and experienced a bit of a mini-crash in 2008, it’s also proven to be one of the most valuable means of building wealth since its inception. Even if you started investing in stocks in 2005, just a few years before the recession hit, you would still have a return of 72 percent over 10 years. Over the lifespan of its existence – since 1950 – the S&P 500 has enjoyed a return of more than 12,000 percent.

Advertising

So while there certainly will be hiccups along the way, the historical trend favors those who invest in stocks.

“OK, I’ll Find the Best Company and Buy Its Stock”

You might be holding back on investing because you want to find a great company with a business model you can fully support.

While there’s certainly nothing wrong with investing in a great company, the last thing you want to do is to park all of your money in that one company. If it goes belly-up, then you could lose your entire investment.

Instead, opt for diversification. Spread your money among various stocks, bonds and mutual funds.

“If you want to manage portfolio volatility” says Tom Biwer, an investment manager at Wells Fargo, “then following that old cliché about not having all your eggs in a single basket is a good idea.”

Advertising

“I’ll Just Buy Into Companies That Other People Are Buying”

A go with the flow mindset might work when you’re on a road trip and trying to decide your driving speed. However, that’s not always the best way to invest your money.

If you think you should invest in XYZ Corp. because everybody else thinks it’s great and is investing in it, then you might be buying a stock that is considered overbought. In a nutshell, that means the stock price could come collapsing down at any time. You might end up taking a steep loss.

“My Uncle Gave Me a Great Stock Tip; I’ll Buy Into That Company”

As stock market guru Jim Cramer says: “Tips are for waiters.”

Somebody might be telling you what you think is a hot tip about a company that’s about to be acquired or report stellar earnings. However, if the person giving you this information really knows that and tells you about it, then he or she is committing a crime. It’s called insider trading and it can get you into a lot of trouble with the Securities and Exchange Commission.

Advertising

The best advice is to do your own research with publicly available information and purchase stocks accordingly.

“I’m Just Going to Put Cash in a Lockbox and Save That Way”

The problem with stuffing cash in the proverbial mattress is that your money won’t grow. However, what will grow is the cost of products and services that you buy. That’s called inflation.

So if you put cash away in a lockbox, you’re in reality losing money because, thanks to inflation, that money loses its purchasing power over time.

“My Car Is Considered an Asset; It’s An Investment”

While a car purchase may be the biggest purchase you commit to besides your home, the large price tag doesn’t make it an investment. An investment is supposed to make you money. A home is more likely to appreciate over time, while a car depreciates over time. Buying a luxury car for resale value doesn’t make sense because only 1/10 of the top cars for resale value are over the “luxury threshold” of $35,000.

Advertising

It’s important to acknowledge that car purchases are not investments. So remember to research all your options carefully to see how well your vehicle model and make resell, because you’ll never be able to recoup your initial cost of buying the car in the first place. It’s much better to buy a cheaper car and put your money towards better investments.

“I’m Living Paycheck to Paycheck; I Don’t Have Money to Invest”

This might seem like a valid excuse, but the reality is that you should opt for some lifestyle changes so you can put some money away into a mutual fund.

As noted above, time is your friend when it comes to investing in the stock market. As Marcia Brixey has pointed out, if you start investing $10 per week at 8 percent beginning at age 30, you’ll have just over $99,000 by age 65. However, if you had started 10 years earlier with that same investment strategy, you would have earned more than $228,000 – a difference of more than $129,000.

Once you learn the facts and become more comfortable with investing, you can watch your money grow. Won’t that be a great feeling?

Featured photo credit: http://photopin.com via flickr.com

More by this author

Anum Yoon

Writer & Journalist

Taxes: 10 Terms You Should Know If You Want to File By Yourself This Year Weird Laws Around the World That You’ve Never Heard Of Six Unconventional Ways to Become a Homeowner 10 Underrated Netflix Movies And Shows To Binge Watch During The Cold Weather Can Self-Driving Cars Be Ethical?

Trending in Money

1 How to Answer the Tough Question: What are Your Salary Requirements? 2 How Personal Finance Software Helps You Get More Out of Your Money 3 The Definitive Guide to Get Out of Debt Fast (And Forever) 4 35 Real Ways to Actually Make Money Online 5 30 Fun Things To Do With Your Friends Without Spending Much

Read Next

Advertising
Advertising

Published on November 8, 2018

How to Answer the Tough Question: What are Your Salary Requirements?

How to Answer the Tough Question: What are Your Salary Requirements?

After a few months of hard work and dozens of phone calls later, you finally land a job opportunity.

But then, you’re asked about your salary requirements and your mind goes blank. So, you offer a lower salary believing this will increase your odds at getting hired.

Unfortunately, this is the wrong approach.

Your salary requirements can make or break your odds at getting hired. But only if you’re not prepared.

Ask for a salary too high with no room for negotiation and your potential employer will not be able to afford you. Aim too low and employers will perceive as you offering low value. The trick is to aim as high as possible while keeping both parties feel happy.

Of course, you can’t command a high price without bringing value.

The good news is that learning how to be a high-value employee is possible. You have to work on the right tasks to grow in the right areas. Here are a few tactics to negotiate your salary requirements with confidence.

1. Hack time to accomplish more than most

Do you want to get paid well for your hard work? Of course you do. I hate to break it to you, but so do most people.

With so much competition, this won’t be an easy task to achieve. That’s why you need to become a pro at time management.

Advertising

Do you know how much free time you have? Not the free time during your lunch break or after you’ve finished working at your day job. Rather, the free time when you’re looking at your phone or watching your favorite TV show.

Data from 2017 shows that Americans spend roughly 3 hours watching TV. This is time poorly spent if you’re not happy with your current lifestyle. Instead, focus on working on your goals whenever you have free time.

For example, if your commute to/from work is 1 hour, listen to an educational Podcast. If your lunch break is 30 minutes, read for 10 to 15 minutes. And if you have a busy life with only 30–60 minutes to spare after work, use this time to work on your personal goals.

Create a morning routine that will set you up for success every day. Start waking up 1 to 2 hours earlier to have more time to work on your most important tasks. Use tools like ATracker to break down which activities you’re spending the most time in.

It won’t be easy to analyze your entire day, so set boundaries. For example, if you have 4 hours of free time each day, spend at least 2 of these hours working on important tasks.

2. Set your own boundaries

Having a successful career isn’t always about the money. According to Gallup, about 70% of employees aren’t satisfied with their current jobs.[1]

Earning more money isn’t a bad thing, but choosing a higher salary over the traits that are the most important to you is. For example, if you enjoy spending time with your family, reject job offers requiring a lot of travel.

Here are some important traits to consider:

  • Work and life balance – The last thing you’d want is a job that forces you to work 60+ hours each week. Unless this is the type of environment you’d want. Understand how your potential employer emphasizes work/life balance.
  • Self-development opportunities – Having the option to grow within your company is important. Once you learn how to do your tasks well, you’ll start becoming less engaged. Choose a company that encourages employee growth.
  • Company culture – The stereotypical cubicle job where one feels miserable doesn’t have to be your fate. Not all companies are equal in culture. Take, for example, Google, who invests heavily in keeping their employees happy.[2]

These are some of the most important traits to look for in a company, but there are others. Make it your mission to rank which traits are important to you. This way you’ll stop applying to the wrong companies and stay focused on what matters to you more.

Advertising

3. Continuously invest in yourself

Investing in yourself is the best investment you can make. Cliche I know, but true nonetheless.

You’ll grow as a person and gain confidence with the value you’ll be able to bring to others. Investing in yourself doesn’t have to be expensive. For example, you can read books to expand your knowledge in different fields.

Don’t get stuck into the habit of reading without a purpose. Instead, choose books that will help you expand in a field you’re looking to grow. At the same time, don’t limit yourself to reading books in one subject–create a healthy balance.

Podcasts are also a great medium to learn new subjects from experts in different fields. The best part is they’re free and you can consume them on your commute to/from work.

Paid education makes sense if you have little to no debt. If you decide to go back to school, be sure to apply for scholarships and grants to have the least amount of debt. Regardless of which route you take to make it a habit to grow every day.

It won’t be easy, but this will work to your advantage. Most people won’t spend most of their free time investing in themselves. This will allow you to grow faster than most, and stand out from your competition.

4. Document the value you bring

Resumes are a common way companies filter employees through the hiring process. Here’s the big secret: It’s not the only way you can showcase your skills.

To request for a higher salary than most, you have to do what most are unwilling to do. Since you’re already investing in yourself, make it a habit to showcase your skills online.

A great way to do this is to create your own website. Pick your first and last name as your domain name. If this domain is already taken, get creative and choose one that makes sense.

Advertising

Here are some ideas:

  • joesmith.com
  • joeasmith.com
  • joesmithprojects.com

Nowadays, building a website is easy. Once you have your website setup, begin producing content. For example, if you a developer you can post the applications you’re building.

During your interviews, you’ll have an online reference to showcase your accomplishments. You can use your accomplishments to justify your salary requirements. Since most people don’t do this, you’ll have a higher chance of employers accepting your offer

5. Hide your salary requirements

Avoid giving you salary requirements early in the interview process.

But if you get asked early, deflect this question in a non-defensive manner. Explain to the employer that you’d like to understand your role better first. They’ll most likely agree with you; but if they don’t, give them a range.

The truth is great employers are more concerned about your skills and the value you bring to the company. They understand that a great employee is an investment, able to earn them more than their salary.

Remember that a job interview isn’t only for the employer, it’s also for you. If the employer is more interested in your salary requirements, this may not be a good sign. Use this question to gauge if the company you’re interviewing is worth working for.

6. Do just enough research

Research average salary compensation in your industry, then wing it.

Use tools like Glassdoor to research the average salary compensation for your industry. Then leverage LinkedIn’s company data that’s provided with its Pro membership. You can view a company’s employee growth and the total number of job openings.

Advertising

Use this information to make informed decisions when deciding on your salary requirements. But don’t limit yourself to the average salary range. Companies will usually pay you more for the value you have.

Big companies will often pay more than smaller ones.[3] Whatever your desired salary amount is, always ask for a higher amount. Employers will often reject your initial offer. In fact, offer a salary range that’ll give you and your employer enough room to negotiate.

7. Get compensated by your value

Asking for the salary you deserve is an art. On one end, you have to constantly invest in yourself to offer massive value. But this isn’t enough. You also have to become a great negotiator.

Imagine requesting a high salary and because you bring a lot of value, employers are willing to pay you this. Wouldn’t this be amazing?

Most settle for average because they’re not confident with what they have to offer. Most don’t invest in themselves because they’re not dedicated enough. But not you.

You know you deserve to get paid well, and you’re willing to put in the work. Yet, you won’t sacrifice your most important values over a higher salary.

The bottom line

You’ve got what it takes to succeed in your career. Invest in yourself, learn how to negotiate, and do research. The next time you’re asked about your salary requirements, you won’t fumble.

You’ll showcase your skills with confidence and get the salary you deserve. What’s holding you back now?

Featured photo credit: LinkedIn Sales Navigator via unsplash.com

Reference

Read Next