There are a lot of reasons people avoid investing -- and not all of them are bad. For example, if you don't have any cash to spare, it makes sense that you'd skip investing in favor of paying your bills. But there are other excuses that just don't hold water. Here are four that hold too many people back.
1. Investing is too complicated
I used to think that only people with finance degrees could successfully invest on their own, but once I dived in, I realized that's not the case. There are plenty of investments that anyone with any sort of background can use to grow wealth.
Index funds are one of the best options for investors of all skill levels. These are bundles of stocks that mimic the performance of a common stock market index, like the S&P 500. When you invest in one of these, you're instantly diversifying your savings. Plus, index funds are among the cheapest investments out there.
There are also plenty of robo-advisors if you don't feel comfortable choosing investments for yourself. All you have to do is answer some questions about your finances and long-term goals. Then, the robo-advisor will choose investments for you.
You'll pay fees for this service, and your portfolio won't be as tailored as it would be if you designed it yourself. But it takes a lot of the work off your shoulders. All you have to do is let your money grow and check in once in a while.
2. You need a lot of money to invest
With the rise of fractional shares, it's possible to buy a piece of any company for just a few dollars. Fractional shares work just like they sound. Rather than purchasing an entire share of a company, you purchase a fraction of a share at a fraction of the cost.
Not all brokers allow fractional share investing, and those that do might set minimums that dictate how small of a share you can purchase. But this type of investing is becoming increasingly common, and you might be able to get started with as little as $1.
3. You have to spend a lot of time researching stocks
If you plan to invest in individual stocks, you will want to stay up-to-date on company news, earnings reports, and stock metrics. But not everyone has the interest or the time to do this. And that's totally OK.
Investing in index funds, as mentioned above, is a great way to grow your wealth with minimal effort. Stocks in index funds are usually at the forefront of their industries, and with your money so well diversified, the performance of any single stock isn't going to make or break you.
4. You don't have access to a workplace retirement account
A workplace retirement account can certainly make investing easier, but there are plenty of other accounts you can open on your own. If you're investing for retirement, an IRA is probably your best bet outside of a workplace retirement account. You can choose how you want to invest your money and set up automatic contributions of up to $6,000 this year ($7,000 if you're 50 or older) so you don't have to manually transfer funds yourself.
A taxable brokerage account is also an option if you don't want to wait until retirement to have access to your money. You won't get the same tax breaks, but you can invest as much as you'd like in whatever you want. And if you hold your investments for more than one year before selling, your earnings become subject to long-term capital gains tax. This can save you money compared to paying short-term capital gains tax.
Ultimately, investing is a long-term strategy for growing your wealth, so the sooner you begin, the better off you'll be. Start small if you're still nervous about investing and then add more money over time as your confidence increases.