the job you want, or making the money you thought you would at this point in
your life; but it’s time to make that money work for you. I deal with a lot of
clients on a day-to-day basis that vary in age and income, but what really
drives me crazy is when I see young people who are too afraid to invest their
money into anything. Instead they keep it under their mattress, or worse, spend
it on things they’ll find useless about five minutes later.
I’m not here to scrutinize every cent people spend their money on. Despite
being someone who is a relatively young investor and professional in his field,
I spend money on some pretty stupid things too. What really gets me are
the countless excuses that people come up with for not putting their money to
work. Whether it’s hearing about bad experiences from other people, not
having enough money, thinking it’s too complicated, or just not knowing their
options, people are very quick to give up before they even start. Here are five
bad excuses for not investing:
“I know people that lost money”
Yes, investing comes with a risk; just like riding your car comes with the
risk of a car accident. Despite the fact that we can turn on our TVs at any
given time and hear about the most horrific car accidents, many of us still
When it comes to investing, you WILL make mistakes. You will not be the
first or the last to make them. I don’t mind making a mistake with my finances
(or in anything in life for that matter) as long as I meet two criteria. One: I
learn something from the mistake. If I lose some money because of my mistake,
then I chalk it up to paying life tuition for that experience. Real life
experiences will teach you much more than any school ever could. Two: I don’t
make the same mistake twice. This flows directly from the first criteria. If you
paid for the lesson once, don’t pay for it again.
As depressing as some people’s financial losses may be, don’t avoid listening
to these stories. Ignorance is not bliss; ignorance is costly. I love hearing
about other people’s blunders (not that I get joy out of it…usually). You should
learn from them just as you would from your own mistakes.
There will always be aspects of investing that you cannot control. There is
always an X factor to investing. Some variable you didn’t see coming or didn’t
count on impacting you. Anything can affect your investments, from a bad press
release to divine intervention. Remember that these unknown variables have just
as much of an opportunity to make you big money.
“I don’t have enough money to invest”
My follow up question is usually, “how much money do you THINK you need to
start investing into something?” The answer is usually around $20,000 to
$100,000. The fact is that you don’t really need that much to start at all. You
can start with $1,000. I know this because that’s what I started with. The
important thing is to be disciplined enough to put away a little bit at a time.
Take it from an accountant, the dollars add up quickly.
Some people also recommend taking out a loan to start investing. I’m strongly
against this for young investors simply because it’s not a good idea to start
your financial life with lots of debt (student loans already took care of that).
It can easily snowball and weigh down on you at the beginning, especially since
you’re still learning to invest and are going to make mistakes (I don’t care if
you just got your Ivy League diploma in finance, this still applies to you).
People have more money than they realize. Not having money and not managing
it well are two completely different things. There are a lot of sources that
money comes from (other than your 9 to 5 job) that you can use to start with.
Tax refunds and grandma’s birthday money are great starting points. The problem
is that this money ends up getting spent on a new iPhone that will be out of
date in about six months.
“Investing is so complicated”
Most people I meet think they need a very extensive academic background in
finance just to be able to start. Instead, people just need a push in the right
direction. All of us who are considered experts by society started out not
knowing the first thing about finance. You can learn. That’s the beauty of
The real turnoff for people is usually the extensive jargon in finance that
confuses them. The fact is that most of that jargon usually has a very simple
explanation behind it. Try looking up a term like ‘market cannibalization’ and
see the long-winded textbook definitions you end up with. Here’s a simpler
definition: “the sales of our old product are down because people are
spending their money on our new product.” (I have half a mind to publish
a book of financial definitions in the form of a children’s pop-up book). News
flash: that jargon is just there as a barrier to entry for people.
Before diving head-first into investing, it’s definitely worth it to grab a
few books and get some background knowledge. Still confused? Ask someone who
knows more about it. Look at your Facebook friends and tell me that not one of
them might be able to help you clarify some definitions over coffee. My friends
ask me all the time and I’m happy to oblige (I figure I paid for my degree, I
may as well put it to use). Even if you’ll be getting a professional to manage
the finances for you, it’s worthwhile to have some kind of idea about what is
going on with your money while it’s in someone else’s hands.
“I don’t know where to start”
People don’t know what their options really are. In fact, there are
countless. That’s why finding your options isn’t the hard part, it’s picking
one. Once you decide whether to invest something, you have to decide what
it’ll be and how to go about it. It really comes down to two
options: do everything yourself or pay a professional to do it for you.
Handling the investments by yourself does take more effort and knowledge, but
as I hope you’ve realized by now, it’s not impossible. It takes a little more
investment into knowledge before diving in, but it can save you money in the
long run for all of the fees you would pay a professional.
Whether or not you already have a formal education in finance, I would
recommend a simulator where possible. If investing in the stock market, there’s
no sense in putting your money at risk right off the bat. Why not use a stock
portfolio simulator to try out the stuff you’ve learned? There are countless
free ones on the internet that will let you practice using actual stock market
quotes. Try that for a few months before diving in. Once you feel that you’ve
gotten the hang of it, virtually every financial institution will have the
option of letting you open a self-directed investing account. If you get stuck
or have questions, they’ll still have professionals you can call for help.
Not comfortable making a call on investments yourself? Have a professional do
it for you. That’s what they get paid for. Just remember that paying a
professional to invest your money doesn’t rid you of the risk of losing that
money. What you’re really getting is someone who has invaluable experience and
won’t make beginner’s mistakes. They can lay out your options based on their
experience for people in similar situations.
Think about it:
As a young investor, you have a big advantage on your side; time. You can
afford the riskier investments that have the chance for the greatest payoffs. If
you lose your first $1,000, you will have the rest of your life to make it back.
That $1,000 over the next 50 years of your life is insignificant, especially if
you get a good lesson out of it.
The bottom line is this: where there’s a will, there’s a way. Most of the
fears young people have about investing their money are just misconceptions that
are blown out of proportion. Don’t let that keep you on the sidelines.
Realistically, there is no crystal ball to tell you the outcome of your
investments, no matter how sure you think you are. Sitting on the sidelines will
not make you money. Do your research and practice before entering the game. Once
you’re in, play to win.
Sasa Jurovicki is a chartered professional account and CA student at