People sometimes hesitate to start investing their money, although they know they should start investing early. They know it’s a smart thing to do for their own financial future. Nevertheless, they hold off. There are three common things that tend to hold people back. If you can find tools that overcome those three things, then you can stop putting off investing and start really making your money work for you.
Getting Clear About the Cost of Investing
People want to invest in stocks because they want to make money. However, there are costs involved in trading stocks as well. There might be a minimum investment. You might have to deal with a variety of fees. Of course, there is always the chance that your stocks won’t do well, in which case you might lose money.
All of these cost factors can become overwhelming. If you don’t feel confident in your ability to understand each of the financial details involved in investing, then you might avoid investing all together. After all, if you just stick your money into a savings account then at least you know exactly what you’re getting. However, that’s not the smart way to go. Instead, you want to find financial tools that will keep your costs minimal while also making them transparent.
Reducing the Complexity of Trading
Cost isn’t the only thing that people get confused about when it comes to investing. There are many details that you can get wrapped up in when it comes to stocks. Which companies should you invest in? What is the right time to trade a stock? What are the factors that you should consider when determining how many shares to buy? You could get a degree in finance and still feel like you don’t understand all of the nuances of trading.
It’s easy to let yourself get mired in those details. If you do, then you can become immobilized with indecision. However, you can do a lot of really smart investing without having to focus on all of the subtleties of each detail. It’s possible to work with financial tools that minimize that complexity to make investing go smooth and easy for you.
Dealing with Friction in Investing
Generally speaking, it is friction that limits people from taking action towards investing their money. Friction can be anything in the market that makes it challenging to proceed with investments. Cost and complexity are two types of friction. However, there are many others.
For example, your own human psychology can create frustration, hang-ups, and fears that limit your ability to participate wisely in investing in your own future. Investing requires you to make decisions, immediately and over time. If you aren’t confident in your financial decision-making abilities, or if you struggle emotionally with considerations regarding risk vs. rewards, then you might find it too frustrating to engage with your investments.
There is also a specific type of thing called “friction cost”. This has to do with how many people are involved in handling your investments for you. In traditional investing, you might have more than one dozen people involved in your account including not only your fund manager but also brokers, researchers, and other professionals whom you may never even meet. The more people involved, the more you pay.
All of these complications can make it feel like it’s not worth it to invest. Don’t forget to see the forest for the trees, though. If you take the time to find the right apps, like spaceshipinvest, financial services companies, and other tools to get you started off on the right foot then investing doesn’t have to be that challenging at all.