Tuesday, January 17, 2012
Twelve Reasons For Not Investing/Taking Control
Being a bald guy, there aren't too many bald jokes I haven't heard. I think I have a pretty good sense of humour, but after a while, even a funny joke starts to get old. Likewise, I have been around long enough that there aren't too many reasons I haven't already heard from people who say they can't invest in the stock market, other than mutual funds. Bald jokes I don't care about so much. I do care about the reasons people feel they can't generate at least a little income by putting some of their money to work in the stock markets. Here's a dozen, I will add more next time.
"I have my money in mutual funds, why change?"
There was a time when mutual funds made sense for the personal investor. Today, Exchange Traded Funds (ETF's) are cheaper, and as such, can often outperform all but the best mutual fund. Also, there is no penalty for selling an ETF, just a regular commission.
Ever see the Fram Oil Filter commercial - "You can either pay now, or pay a whole lot more later!" Even a very small amount of money can grow to a reasonable amount given a sound strategy and the power of compounding. Catching up later requires much, much more capital.
"You make things sound worse than they are - I am happy with the way things are!"
Expect higher taxes, more expensive health care, more volatility in the stock markets, slashes to pension funds, lower paying jobs. I don't think people who have suffered the ill effects of any of these would say I am exaggerating.
"You are just putting others down!"
On the contrary. Many people have done remarkably well, given the current environment. That doesn't mean there isn't a better way.
"Clearly, you have some sort of hidden agenda!"
I play with my hands above the table for all to see. What you see is what you get. I have no difficulty showing people what I do. If nothing else, I want them to become more educated in dealing with the people who are after their money. Anybody who knows me can tell you just that.
"What about ROI, or free cash flow, or company management, or preferred shares, or rental properties, or... ."
They are all important. It is normal for newer ideas to raise all sorts of questions. However, we want to focus, and concentrate on the things that determine our expected outcome.
"You can't live on the income from $5,000.00!"
The important thing is to start now. I have yet to find "someday" on any calendar!
"I don't have enough money to do everything!"
It isn't this or that, it's both. We should put a little money into other things, and use a little to learn how to improve the returns on our equity investments. Once that begins to happen, we will find ourselves putting more money into the things that give the greatest return (those without exceptional risk).
"I'm not interested in a get rich quick scheme!"
Get rich quick schemes don't work. Improving returns will not make us rich overnight, but it can make us more money in a shorter period of time.
"Why does it have to be all about making money!"
Money is only a unit of exchange. More money means more time for friends, relatives, self, and others. Few are truly motivated by money - usually, it's what we can do with the money that is most important.
"How can you say anyone can do it?"
Knowing what to do is one half of the solution. People with a willingness to practice applying it is the other half.
"How can you/we possibly expect to do better than the professionals?"
Actually, the professionals are involved in an entirely different game than us, for a whole variety of reasons. Few realize it, but our smaller size is our greatest advantage over the professionals. Also, the internet has made available the tools and information which can benefit the personal investor like never before.
Do you see yourself in any of the above reasons for not getting more involved and taking greater control?