Approaching the Stock Market with Courage

To many, the stock market is a foreign concept and believed to be something that is reserved for the rich. This belief stems from not knowing enough about the stock market, but contrary to what some may believe, EVERYONE can participate in the stock market.

So, what exactly is the stock market and how can EVERYONE participate?

Simply put, the stock market is where shares of publicly traded companies are bought and sold. Companies that many of us know and love, such as Google, Apple, or Netflix are among the many companies sold on the stock market.

To participate in the stock market, you as the investor will have to use a stockbroker to purchase and sell shares. In today’s day and age, online stockbrokers such as TD Ameritrade, M1 Finance, Robinhood, and WeBull are among the popular options. Once you sign up for an account with a stockbroker, you can start investing.

M1 Finance is a really great option for beginners because of the option to purchase fractional shares, instead of whole shares. Fractional shares are less intimidating because investors can start investing with as little as $1 into a stock. Additionally, M1 Finance enables investors to invest on auto pilot. To accomplish this, you must first make what M1 Finance refers to as an M1 Pie. Investors can choose companies to "add it as a slice of the pie" and change the percentages for each slice and investors can add as many “slices” as they’d like, but the total will have to be 100%.

So what are some common reasons that people do not invest in the stock market?

1. They believe they don’t have the money to do so.

2. They’re not sure what to invest in.

Everyone* has the money to invest in the stock market. The common misconception that only the rich can invest is tied to the idea of the stock market being seen as a get rich quick scheme. Although we would like to be a means to get rich, being an investor is a journey and it is best to be a long term investor. When figuring out what to invest in, a rule of thumb is to simply invest in companies in what you LOVE and USE. If you found this website via Google and you’re reading this on an iPhone, you just figured out two stocks to invest in (Google and Apple). Doing this will allow you to get comfortable with the idea of investing, and you will realize that there are many companies you use on a daily basis, that you can also purchase shares of.

To get started on putting funds aside for investing, you can take a look at your spending habits and see what you can cut back on. This is where the idea of wants and needs come in, yes you need food, but you do not NEED a 5 star meal. Of course, a 5 star meal is nice sometimes, but making it a habit can be costly and that extra money that is spent on that, can instead be spent on investments.

Why would I invest for tomorrow, if I can eat good today?

Two words. GENERATIONAL WEALTH, okay maybe four…NET WORTH.

A lot of people think that investing is pointless and is just another bill. But, that is farthest from the truth. When you invest, that money doesn’t just disappear into thin air or locked away until you’re ready to sell it…it grows.

When you invest, it’s actually pretty fun (at least to me lol) to watch your money grow. Added zeros are always nice to see, so throughout the years with consistent investing your account may grow from $100 → $1,000 → $10,000 → $100,000 and etc. because no limit exists. This is why I preach long term investing, the S&P 500 which is an index fund with the 500 largest companies on the stock market in the US. The S&P 500 has grown exponentially in the past 10 years, if you were to invest $100 monthly into the S&P 500, in 2022 for every $100 you would have approximately $354, which is a bit over 3x your money. I know a lot of you are surprised by that number, but that could be you in the next 10 years or sooner. 😅

So I mentioned two terms: Generational Wealth and Net worth, which are two very, very, very important words. If you start to invest, you can build generational wealth which will change the entire trajectory of your family. Generational wealth is the transfer of wealth passed down to younger generations. Generational wealth is important because you are essentially giving generations after you a head start, it is not just financial, it is also knowledge because you not only want to pass down the riches, but you want to pass down knowledge on how to continue to grow the wealth and also how to maintain it. When you build generational wealth, you are opening up many doors for generations to come, to have opportunities that you did not have.

Now, net worth is the value of your assets minus your liabilities. Net worth ties into generational wealth because you are passing down assets (stocks, bonds, cash, real estate, businesses and etc.) Building your net worth is important because it is a picture of your financial stability. Many people aspire to have financial freedom, only working when or if they want to, but not necessarily because they need it to survive. If you build a net worth that can support your lifestyle yet also be an adequate amount to be passed down, that is how you can have financial freedom. Passive income is another option to grow your net worth, which is when your money works for you. Passive income can be achieved from many mediums — real estate (tenants), businesses (customers), stocks (dividends) and etc. There’s so many different routes to make money and build your net worth and grow generational wealth, you just have to figure out what works for you, not what’s easy because it won’t always be easy.

What if you need to sell all of your stocks because you need the money?

You can sell it.

Buttttt, what some may not realize is that you can actually borrow against your stock portfolio. It is best to discuss this with a financial advisor because it can be risky, but selling is not your only option if you need the money.

Yes, the stock market can be intimidating at first because it’s new. But, so was everything else at first…learning how to tie your shoes, how to ride a bike. Yes, you may tie your shoes too loose and trip or you may forget how to pedal and fall off your bike, the same can happen with the stock market, you may make a few wrong decisions when investing and that’s okay, it’s normal, just learn from all of your mistakes and approach the stock market with courage. You are one step away from not only changing your life, but the entire trajectory of your family’s as well.