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The Stupid Simple Reasons People Don’t Invest in the Stock Market

The Reasons People Don't Invest in the Stock Market

“Rule number one: Don’t lose money. Rule number two: Don’t forget rule number one.”

-Warren Buffett-

The great Warren Buffett has made billions by investing in the stock market, and one of his most famous quotes is relating to the fear of losing money.

Let’s sit and think about that for a second… One of the richest people in the world appears to have a fear of losing money…

How does this translate to the average, financially illiterate Joe?  “Jesus, If that dude is worried about losing money, I better just stay out of that roller coaster of a market.”

My money is safer under my mattress.  I can count it there, I can take it out and lay on it, maybe spread it around the bed and… well… never mind.

I digress.

The average Joe doesn’t invest, at least, not statistically.

Americans with money appear to know where to put it.  89% of households with an income greater than $100,000 own stocks, while only 54% of households who make $30,000 -$74,999 invest.

Why is that?  Maybe they have the extra cash available to put it away, or…perhaps, they are a key to some illuminati-esque secret society that provides in-depth financial guidance?

Hmmm…

Stock Market Misconceptions

dog in a top hat

Prior to stumbling upon this personal finance community, I was under the impression that investing in the stock market was for the rich and financially educated.

You know, the kinda folks who have doors opened for them, speak in British accents, and eat caviar… or some other rich shit.

Not for country hillbillies like myself.

Obviously, a guy who owns chickens, spends most of his free time talking about goats, and why getting a 3rd dog is a good idea with his wife has no place on Wall Street.

“Your money is no good here, sir!  It’ll only serve to stink up the joint.”

Much to the dismay of the market, my wife and I have placed quite a bit of cash there.  Between our 401ks and a new, small post-tax investment, we have over $100,000 invested.

Bring me your finest caviar, my chickens only eat the best.

Our 401ks are smaller than they probably should be, but we are lucky to have a good chunk of cash invested.

I had always been afraid to put more money in the market… because, well… I thought I was sure to lose my money if I didn’t have some kinda Gordon Gekko insider knowledge.

So, we invested the minimum amount required to earn 100% of our companies match.  I still can’t believe they took my money!

Lack of Money

dog with a pencil

I don’t believe that folks who earn more than $100,000 a year are naturally more intelligent than folks who make less than $50,000 annually.

So, why is it that they statistically invest at a much higher rate?

They. Have. More. Money! (Gasp)

The fact that this isn’t talked about more blows my mind.  Folks with more money tend to have the ability to invest more money.

People who are out there struggling, living paycheck to paycheck, aren’t exactly concerned with investing.

They are looking to get to the next pay day, to have enough money for groceries, or hoping they can continue to pay their student loan debt.

Although it may seem silly to us that they aren’t contributing to their 401k, they need that money now… and retirement sounds like a fairy tale.

If you ever feel the uncontrollable urge to berate someone online for losing out on “free money”… stop.  They aren’t stupid, they’re struggling.

What The Hell is the Stock Market?

dog using a computer

To prove how financially illiterate I used to  be, I thought the S&P 500 was a singular company until about 3 years ago.  So… Yea…

High school prepared me well for life, the curriculum was well rounded and taught me pretty much everything I needed to know about how to be financially successful.

Things like…. Uhh…

I’m sitting here, tapping my fingers on my keys trying to think of something that high school taught me.

I can’t think of a single practical thing I learned in high school outside of wood/metal shop.

Wait!! I know the difference between mitosis and meiosis!

My experience can be at least partially attributed to the many nights I spent drinking black market booze and smoking pot in corn fields.  Don’t judge me.

With that being said, I don’t think I missed out on any class offerings.  Kids aren’t offered the opportunity to learn about financial success, let alone the stock market.

We learn from our parents.  Unfortunately, my parents didn’t invest, didn’t know about investing, and didn’t teach me about investing.

They instilled some practical financial knowledge in me, but investing was talked about as something only the rich do.

Investing in the stock market appears to be as common as Sasquatch sightings.  Sure, the neighbor said he a saw a Squatch, but… come on, he also said he owns stocks…  We know he’s full of it.

Fear of Losing Money

dave chapelle holding money

“Don’t invest any money you’re not prepared to lose”.  This was something I heard many, many times growing up.  Fear of the stock market was instilled in me at a young age.

Let’s face it, we all work hard for our money.  We spend many, many hours away from home, with people we probably don’t like, not because we want to, but because we are getting paid.

That hard earned money is cherished, it’s not placed in the stock market just to be lost the next time the President tweets something about China, or a CEO smokes some pot with Joe Rogan.

No, no…that money needs to be put somewhere safe.  Shielded from the turmoil of the market.  Protected like a Navy SEAL’s daughter on prom night.

The thought of losing the money I’ve earned while listening to Glen bitch about how he works harder than everyone else in his single employee department would be too much.  And, for this reason, I shall not invest in the stock market because… I’m scared of what I do not understand!

I realize I’m poking fun, but I can because this was me not long ago.  I let fear drive my life…

The S&P 500 has averaged right around 10% annual returns for about 90 years!  Now, that doesn’t mean you’re guaranteed to get 10% a year.

That’s the average return over 90 years.  Some years are much lower, some are much higher, but if you bought some of the S&P 500 in 1928, you would be seeing an average of 10% annually, for 90 years.

Hmm… Perhaps, I can pull the financial chastity belt off my cash?

Final Word

Is the stock market risky?  Sure, you can lose money there.  A company can go bankrupt, CEOs do dumb shit, and the President is allowed to use Twitter unrestricted.

Elon Musk Smoking Pot

With that being said, I feel pretty confident in the US economy and if the S&P 500 goes to $0, I’d assume I have bigger concerns than the money I lost… #anarchy

I’m not expecting anyone to invest based on this short little post, but I do encourage you to get out there and learn.  Educate yourself about the market.  Personally, I’d start here!

Find the time to plan for your future, it is coming… and if you’re currently living paycheck to paycheck, know that you can get out of that cycle, you can get some money invested, and it’s totally fine it hasn’t happened yet.

If you can’t invest now, learn about the many ways to invest.  When the time comes, and you do have some money to invest, you’ll want to make an educated decision.

Good luck out there!

5 Comments

  1. Glen sounds like a real class act. Someone you’d like to bring home and meet the parents.

    A compelling post with a relatable narrative. I hope some folks take this to heart and find ways to build real wealth like the richest amongst us do.

    Thanks again for including me in your post!

  2. I agree that people who make less money don’t have money to invest. And it is scary to put the only extra cash you have into a volatile market! I keep a ton of cash reserves out of market fear, but I have more invested than I have in cash.

    • debtandcupcakes

      October 23, 2018 at 10:32 am

      It is scary!! Losing that hard earned cash is hard to consider, the growth potential is there though… Just need to keep reading and learning. We are also investing now. Look at all being all grown! 🙂

  3. Really great read! Fear of losing money is a real thing. But I fear the opportunity cost of not investing in the stock market! Keep up the great work.

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