Why ‘no money’ is no excuse not to invest


*Article by Financial Coach Rebecca Pritchard


Last year I filmed five videos (all video links at bottom of this article) on the rookie mistakes that first time investors make. The “I’ll invest when I have more money” mistake hit a sore point for a lot of people.

This excuse is a huge reason why millennials take no action on investments, and why their investment strategies can be so off-balance.

People think, “I must have a big chunk of money to invest, and I don’t have that right now, so how could I possibly invest?”

“Don’t blame me, it’s my bank account’s fault,” is the mindset.

This is bullshit.

Here’s three reasons why investing now, even with the smallest amount to start with, is a good idea:

1. You’re never going to time the market perfectly.

In a perfect investment world, we’d all buy our investments when the market (property, shares, bonds etc.) is low and cheap, and sell them when it’s high and valuable.

This doesn’t always work in reality — key being because you need the right counterparty to buy from and sell to. And why would someone sell to you at the cheapest price, and buy from you at the most expensive price?

It’s also because we don’t know where the high and low points in the market are until we’re looking in the rear-vision mirror.

Therefore, instead of trying to buy at one magical moment, we instead elect to buy regularly, and buy some high, some low, and over time we smooth out the differences. The fancy name for this is ‘dollar cost averaging’.

It’s quite a liberating concept and it takes the pressure off needing to pick the ‘right time to buy’ in a big way.

2. You’ll learn as you go.

Some investments require a certain pre-requisite amount of knowledge. For example, I don’t recommend purchasing a property without a good understanding of how investing in property works.

But with shares, you can definitely learn as you go.

If I tried to explain to you all the share investment concepts of capital growth, dividend yield or reinvestment, price-to-value ratios, earnings per share etc. upfront — you might take in a small amount of knowledge.

But when we have a conversation about your shares in general, the story changes.

You can simply look at your capital growth, your dividends, your holdings. It’s significantly more fun and makes a hell of a lot more sense. You can pick up the rest of the lingo along the way.

This is also why we start small, with whatever we have to invest, and ramp up with regular contributions. We can dip our toes into the water, see if it’s warm, and then keep wading in.

3. You’ve got to invest money to make money.

Part of the reason why people think they should hold back from investing until they have more money, is that they think it’s risky.

But for millennials, investing is in fact a defensive strategy. Unless you’re investing in speculative shares, investing is probably the safest treatment for your money.

By regularly investing, rather than having your money just sitting in cash in a low-interest bank account, I can guarantee you’ll have more money available in the long run, even if you don’t get good investment returns.

Investing into shares means that we don’t have immediate access to our money, and this is a good thing. We always want to have cash available for our short term needs, but removing easy access to our medium and long term money means that it’s a lot harder to stuff things up. We can’t accidentally spend it, or get impatient and use it for a short term goal.

This is why we have to throw excuses out the window and get started on investing now.

If you’ve got $100 to spare each month, simply start with that and see it turn into $1,000.

And if you’ve got $1,000, again, start with that. The key is just getting into the market, and seeing your money grow.


Video Series – Five rookie mistakes that first-time investors make:

Part 1 – Waiting for all the stars to align

Part 2 – I’ll invest when I have more money

Part 3 – You are not diversified if you hold more than one type of bank stock

Part 4 – Be honest about what you are trying to achieve

Part 5 – Don’t be a sheep