How I Finally Got Over My Fear of Investing
Tagged in:

"One thing I learned along the way is that you don’t need a fancy or technical investing strategy—the most important thing is to get started."

Tap to Read Full Story

For years, I made excuses for why I didn’t invest: For starters, I didn’t have much money to spare, thanks to my $30,000 nonprofit salary. And my employer never offered a 403(b) match, so I told myself it wasn’t worth contributing anything at all. (The 403(b) is the nonprofit version of the employer-sponsored 401(k) retirement plan.)

I also thought any money I did have was much safer in savings. Coming of age during the Great Recession, I had a natural distrust of the stock market. I’d seen how the value of my parents’ and other Americans’ portfolios plunged during the recession, and I didn’t want the same to happen to me. (Of course, their portfolios rebounded as the stock market did after the recession, and have continued to grow since, but I was out on my own by that point.)

But perhaps the biggest reason I didn’t invest is because I’d been laser-focused on my debt. After earning two degrees, I had $81,000 of student loans to repay. The day I calculated how much I was forking over in interest ($300+ per month!) was when I got serious about wiping it out—funneling almost all of my excess money toward the goal. Within five years of earning my Master’s, I was debt-free, and ready for my next challenge.

I wanted to save more, but wasn’t impressed with the returns in my savings account. In a year, I’d made just a few bucks in interest—barely enough to cover a Starbucks drink.

[ad 1]

How would I ever build wealth this way?

After learning more about personal finance through books and blogs, I finally realized that if I wanted to beat inflation and grow my money, I had to invest.

I was scared because I didn’t know anything about the market, so I started learning everything I could: I looked up terms I’d heard, but didn’t fully understand, like index funds, exchange-traded funds (ETFs), stocks and bonds.

One thing I learned along the way is that you don’t need a fancy or technical investing strategy—the most important thing is to get started. At 31, I knew I had a lot of catching up to do, especially if I wanted to reach a big milestone, like banking $1 million by retirement.

So I took the plunge.

I started by opening a SEP IRA, a tax-advantaged retirement vehicle for self-employed people like me. (In 2014, I left the nonprofit world for full-time freelance writing.) Now that I’m making more than triple what I used to make, I can afford to contribute at least $500 per month, though it’s been as high as $3,000. (It depends on my monthly income, which fluctuates.) My strategy is to have the same zeal for growing my investments as I once had for paying off debt.

I also decided to invest in diverse and low-cost index funds. Hey, if they’re good enough for Warren Buffett, they’re good enough for me. Though I’ve only been investing for a year and a half, I’ve already seen big gains. (Thanks, bull market.)

Of course, I also know the market can, and probably will, go down again at some point. So I’m committed to not obsessing over daily, even weekly, movements and have adopted a long-term mindset that allows me to invest without being consumed by fear: I only check my balance once a month, and consume just enough news to know what’s going on—but not enough to get riled up or consider panic-selling. As I watch my balance grow over time, I know it’ll be worth it.

Get the Grow Newsletter Every Week
The best money advice you never got, delivered to your inbox weekly.
The best money advice you never got, delivered to your inbox weekly.
 
Related