Stop Making These 3 Bad Excuses for Not Investing

Some people think that investing is reserved for rich people -- those with more than enough money to throw around without having to worry about paying the bills. In reality, investing is something everybody should be doing. Yet according to a recent Bankrate survey, about half of Americans don't own stocks -- a fact that can seriously impede the average worker's retirement savings.

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It's easy enough to make excuses for not investing, but unless you change your thinking, you might be in for a financially disappointing retirement. Here are three common excuses that need to go away.

1. You're too scared

Nobody wants to lose money in the stock market, and if you're not careful, you could end up in that very position. But if you're strategic about the way you invest and pick the right stocks, you stand a strong chance of coming out ahead despite the market's inherent volatility. You see, the reason so many investors get burned by the stock market is that they're in it for a quick profit, but putting money in stocks with the intention of cashing out in six months, a year, or even two years is a dangerous strategy. On the other hand, if you're willing to invest for a decade or more, you can take comfort in the stock market's strong history of rebounding.

Consider this: Although the S&P 500 underwent 27 corrections of 10% or more between 1965 and 2015, it ultimately recovered from every one. That's why, as a general rule, you should only invest money that you don't expect to need for the foreseeable future. If, for example, you're planning to buy a home in the next three years, you shouldn't put your down payment into stocks. Similarly, if you're a few years away from retirement and need your money to pay your living expenses one you stop working, investing in stocks is a riskier prospect. But if you have time to ride out the market's ups and downs, you're in a good position to make some serious money from stocks.

Furthermore, if you're really too scared to invest in stocks or don't have enough time to withstand the market's ebbs and flows, you could always put some money into bonds instead. Though bonds have historically offered lower returns than stocks, they're still a far better option than leaving your money to rot in a basic savings account.

2. You're too poor

According to the above-referenced Bankrate study, not having enough money was the most common reason why people shied away from investing. In reality, even $100 a month would go a long way in helping you amass a sizable chunk of cash. And while it's true that some options, like municipal bonds and certain mutual funds, do impose investment minimums, exchange-traded funds, or ETFs, are generally accessible for those with only a small amount of disposable income.

3. You're too clueless

A lot of people stay away from investing because they don't know where to start, but you don't need to be a financial expert to get in the game. If you take some time to read up on the basics of investing, you'll be putting yourself in a much better position to make smart decisions. Also, while the idea of buying individual stocks might seem incredibly daunting to a newbie, you can eliminate much of the guesswork by opting for index funds instead. Index funds are designed to simply follow existing indexes like the S&P 500. Not only do they offer built-in diversification, but they come with relatively low fees.

Investing is a great way to turn whatever money you have into even more money. Think about the cash you have right now sitting in a bank account. It's probably earning 1% interest at best. But what if you could generate a 5% return on your money, like the type a bond-heavy portfolio might give you? Or, better yet, what if you could earn 8% a year by investing heavily in stocks? The following table shows how much you stand to gain by investing just $100 a month over time:

Table and calculations by author.

If you're serious about growing your money and securing a comfortable retirement for yourself, then it's time to stop thinking up reasons for not investing and just do it. All it takes is a little research and discipline, and you'll be well on your way to accumulating wealth.

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