Like a Virgin: How to Invest for the Very First Time

I have a confession: I’m a stock market virgin.

Okay, not entirely. I’m actually rocking my 401(k). It was easy to set up, virtually automatic for me to contribute to, and I barely miss the money coming out of my paycheck.

But non-retirement investing? I’m not doing it. I’ve gotten to third base, at best. And it’s purely out of fear of the unknown.

My Fear of Investing

I got burned pretty hard the first time I invested in the stock market, losing $1,000 in one day (September 2008 was not the best month to start investing in the banking industry…). It was a financially scarring moment for me, and since then, I’ve developed a healthy fear of putting my money in any remotely volatile situation. I have plenty of scripts running through my head that have stopped me from investing in the past:

  • I’m scared that I’ll lose my hard-earned savings.
  • I’m scared that I don’t know enough to manage a portfolio.
  • I’m scared because I don’t know the best place to start.

So I’ve avoided investing beyond my retirement. I’ve been content to sit on my savings and watch it grow from my contributions alone.

But deep down, I know I’m just being a coward. My money in my savings is lazy – it’s not working for me. If I work so hard to earn it, why shouldn’t it work for me?

How to Conquer Investing-phobia

It took me awhile to realize that my excuses were just that: excuses. I also started thinking about the path I was heading down. What if I kept putting it off and didn’t start for few years (or decades)? I’d probably have the same anxieties and excuses, but I would just be older and will have missed out on valuable years of compounding returns.

I’ve realized that I will never be 100% comfortable. Ever. So I’m starting today. Right now. Even if I don’t have enough information or I want to “time the market.” I need to just get over my fear and do it.

Here’s my basic plan for overcoming my fear of investing (and one I recommend for any other investing virgins out there):

1. Fear = Procrastination. So stop being afraid.

I get nervous when I don’t have enough information to make a decision and take the plunge. That’s a scary position to be in, especially when it involves money. But investing isn’t as scary as finding yourself as an old person with no wealth. So step one is getting over the fact that it may be uncomfortable (risk always is) and to just get started. Finding a way to suppress anxiety is all the more reason why this second step is so important…

2. Start with something simple and low-cost.

The beauty of investing is that the market is open to any type of investor. And the online world of investing has opened up entry points for investors of all sizes. If you’re like me and worried about choosing the right stock, bond or portfolio, start with something simple like an index fund (it tracks the entire market for you, so you’re not just picking something at random). If you’re worried about investing a lot of money up front, start with an online account that doesn’t require a large initial deposit. And if you still haven’t contributed to your employer’s 401(k), that’s an even easier place to start. I keep reminding myself that my first time investing will still be imperfect, but there are easy options to help me ease in.

3. Be consistent and keep learning.

Overtime, a little bit of money invested consistently can go a long way. And even by contributing just $100 every month, I won’t have to worry about fluctuations in the market. Is the market down? My $100 will by me more stocks at a cheaper price. Is the market up? My $100 will by me less stocks but my portfolio will be growing. It all evens out (it’s a fancy term called dollar-cost averaging).

I know I’ll still be worrying about not having enough information before I started investing. But I also know that once I actually jump into the market, I can still keep learning and researching. I’ll become a better and more knowledgable investor over time (and might be able to convince others to take the plunge, too).

Investing for the first time might be painful and it might be messy, but I know I gotta start some time.

So who else wants to lose their “V” card with me?

Original photo: 40-Year-Old Virgin.

 

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6 thoughts on “Like a Virgin: How to Invest for the Very First Time

  1. Agatha

    You know what I struggle with? I only want to invest in companies that are socially & environmentally responsible. I don’t want to invest in & support companies that just out to make money at any cost while exploiting resources and people.
    And it takes research to find out what companies are actually doing. So that’s been my reason for procrastinating – feels like it will take a lot of time to do this research. But maybe I’m wrong? maybe it would not be as hard as I think?

    Reply
    1. Stephanie Halligan Post author

      It’s probably not as much research as you think. Whenever I’m “stuck” in research mode, I break it down into two easy-to-tackle pieces: 1) what can I find out the next 5 minutes to make me feel a little more informed? and 2) what can I do a week from now to follow up on what I learn? Helps get the ball rolling for me 🙂

      Reply
  2. krantcents

    The reality is you cannot save enough money without investing in something! Whether you invest in real estate or the stock market you have to stick your toe in the water. I originally started with real estate and bonds. I eventually went into businesses. I suggest starting small with a very broad market index fund with a small investment. As you get used to it , you can addmore.

    Reply
  3. Chris

    I’m in. Gotta start sometime, and I feel like I’ve been putting it off because I’m still “learning” about it. Which is an excuse for sure. I’ll probably lose, but I never learn anything without losing first.

    Reply

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