Investing in the stock market can generate significant returns, yet for a variety of reasons, people don’t do it. Here are some of the top reasons that people don’t allow their money to grow through investment.
1. Fear of Big Losses
Although there is a science to making stock investments work, many people view it as a type of gambling. They aren’t sure how the stock market works and don’t want to risk their money on investments that may lose big.
The key to defeating this fear is to educate yourself about how the market works. The stock market is much less of a gamble if you investigate potential investments ahead of time and plan for the long term. Day-to-day fluctuations shouldn’t worry you or cause you to sell your stock prematurely.
2. Financial Difficulties
Many people cite uncertainty about the economy as a reason for not investing in the market. In many cases, their uncertainty comes from the fact that they don’t have any money saved for emergencies, are living paycheck-to-paycheck, and may be deeply in debt to credit card companies and car loan and mortgage providers. Obviously, when you don’t have a firm financial foundation, you can’t think about long-term investments. It’s important to get spending and debt under control so that you can explore what investing can do for you.
3. Short-Term Focus
Many people, especially younger people, are focused more on the short term than the long term. Retirement may seem far away, so they don’t feel the need to start investing 401(k) funds yet. In addition, the priority of younger people is often about having fun in the here and now, while investments require them to tie up money for a long time before seeing returns.
4. Large Tax Bills
Capital gain taxes are at an all-time low, which sounds like it should be good for investors. However, since they are so low, they’re probably going to go up by the time most investments into the market pay off. Thus, people avoid investing into the market so that they won’t be hit with a huge tax bill later.