No money? No expertise? Ditch your excuses and start investing anyway

You don’t know where to start. You hardly have any money. You don’t know the financial terms.

Lots of conditions may stop non-investors from becoming investors, says Bola Sokunbi, a financial education instructor and author of Clever Girl Finance.

The intimidation people feel is real, and Sokunbi thinks it stems from a financial literacy gap. The result is thinking you don’t have enough money to start investing and believing it’s just too hard.

The danger of waiting till you have more cash, aside from the opportunity cost of missing out on time in the market, is that you may never actually get around to it, Sokunbi says.

Time ticks on “and people find other ways to spend their money,” Sokunbi said.

First, adjust your mindset. “Investing doesn’t have to be complicated, and you don’t need to be Warren Buffett,” Sokunbi said. “You don’t have to have a financial degree.”

What you do need is a little education to get a sense of how investing works. “Don’t feel intimidated,” Sokunbi said. “Instead, pick up a financial investing 101 book, or Google ‘investing 101.’ This will give you a sense of confidence.”

Learn the core principles, Sokunbi says: what’s a stock, what’s a bond and how fees play a part in your returns. Figure out how much risk you can tolerate, so you’ll know if you should stay more conservative. Understand the importance of diversification.

One of the biggest investor mistakes is giving into panic over the market, Sokunbi says.

Thursday’s deep plunge is a test for many investors, but investing experts counsel staying the course. 

“When there’s a decline in the stock market, people rush to sell,” Sokunbi said. “Or if it’s doing well, people rush to buy.”
Don’t let your emotions shape your investing decisions.

“When you understand it takes time for investments to grow, you start thinking long term,” she said.

When you hear about stock market returns of 7% or 8% over time, remember that at times you’ll see greater returns, Sokunbi says. Other times you’ll see big losses. “Staying in for the long term is how you’ll achieve that average return despite the dips and spikes,” Sokunbi said.

Follow some basic money management to accumulate some cash to invest. 

Frequently, people who say “I don’t have any money” are looking backwards, trying to figure out what happened.

Avoid that frustrating look-back by sitting down with your money and creating a plan for each paycheck, Dixon says. 

Walk through your day. Say you stop and buy takeout one day. “If you allocated for it, that’s fine,” Dixon said. “But if you didn’t write that down, then you’ve taken away from another category.”

“Tell each dollar where to go,” Dixon said.

There’s no minimum for saving and investing, says Brent Weiss, a certified financial planner and co-founder at advisory firm Facet Wealth in Baltimore.

“Just because someone says you can put up to $6,000 in an IRA, don’t think you have to put in that much,” he said.

If you can save $10 a month, save $10 a month.

Schedule regular money dates with yourself and increase your savings by a small amount. “Those small steps will work,” Weiss said. “Down the road, you’ll be saving more than you ever imagined you would.”

Hitting targets like your first $100 or $1,000 is extremely motivating.