What comes to mind when you hear the word investing? Fear? Confusion? Frustration? For many, investing their hard earned money seems like a daunting and intimidating process filled with many unknowns. Without a doubt, investing involves patience and a willingness to learn some key principles, but it does not have to be a fear-inducing endeavor. According to research, individuals often cite the same four reasons when choosing not to invest: lack of knowledge or experience, distrust of the financial industry, lack of pricing transparency and the sheer complexity of investing. Below, we discuss ways to overcome each of these concerns to become a smart investor.

LACK OF KNOWLEDGE/EXPERIENCE

We won’t sit here and act like investing is a cake walk. It takes time, persistence and at least a general understanding of certain financial and investment principles. However, you do not need to have your MBA or have worked in finance for 10 years to comprehend the basics. Fortunately, in today’s world, you can have a wealth of knowledge in front of you at the click of a button. A simple internet search can return blogs, articles, podcasts and more that discuss principles like diversification to lower risk or long-term compounding of returns. Combine the knowledge you gain online with your own common sense, and you’re well on your way to becoming a better investor.

DISTRUST OF THE FINANCIAL INDUSTRY

In many ways, a dose of skepticism may be healthy when you begin investing, but don’t become so skeptical that you avoid it entirely, as you could miss out on many great opportunities. If you understand upfront that markets will admittedly waver, sometimes hour to hour, so you must be patient and diligent, and realize that every investment firm may not have your growth in mind, you will enter the market with a good dose of caution and be able to avoid sometimes overlooked investment traps.

LACK OF PRICING TRANSPARENCY

Most funds will have charges associated with them, such as fixed index annuities and variable annuities, and these can seem confusing or excessive when evaluating various funds. However, investment funds with clearly labeled fee structures do exist. Check out sites like morningstar.com to search for quotes and uncover the annual expenses and sales charges associated with a variety of funds. This comparison will make it easier to invest in a fund that makes the most sense for you.

COMPLEXITY OF INVESTING

Many financial firms counsel their clients to continually scan the market and jump in and out of funds based on the most recent data to be the most savvy investor, a process that certainly sounds complex and time-consuming. This method is not a one-size-fits-all formula, though. There are a multitude of options, from total stock or bond market index funds to target fund portfolios, where your money can grow and future wealth can be built without needing to watch the market hourly or find new opportunities daily.

Although investing is undoubtedly a process, it is one rife with opportunities if navigated carefully and patiently. As you begin, consider your options and do some solid research to eliminate uncertainties, but don’t let your fears overtake your chances for growth and increased financial freedom.

If you have any questions or would like to discuss investment options, please contact me at [email protected].