There’s a common facet of life that underscores every major success. It’s the thread that ties together the Olympian and the award show winner as much as it links the stellar student and even the daily exerciser. It’s hard work. As a society, we know this is true—there are hundreds of miles leading up to that marathon’s finish line, countless hours of studying behind a summa cum laude, and dozens of failed auditions behind that glittering trophy. This isn’t a secret. But you know what it is? It’s boring.
The same thing can be said about money. It’s the link that bonds everyone together, regardless of ability, and yet we often consider those with a lot of money as having the same outlier qualities as a star athlete, student, or actress. Surely the wealthy know something the average person doesn’t know about how to get large sums of cash flowing into their accounts, right? If that’s not the case, then maybe they’re just lucky.
The truth is, the road to financial stability is paved with a lot of the same qualities we esteem to other showcases of success. Aside from the privileged few, it more often than not takes hard work and patience for the average person to achieve a notable sum of cash. And that’s boring. So it’s easier not to get into investing, or worse, to think that it’s too scary to try.
“Investing on its own is not super sexy when you’re doing it properly,” says Priya Malani, resident financial expert for Refinery29. “It takes years to pay off. It’s not very exciting or fast-paced.”
When Malani was in the early phases of her career at Merrill Lynch, a lot of her time was spent learning about investing for wealth management. She says that the more experienced people on her team stressed that smart investing was more dependent on learning about human behavior and creating the right environment for success than anything else. So she studied, and studied some more, and passed a few licensing exams. In other words, she committed to the boring aspects of a future payoff.
In this sense, Malani understands why millions of Americans would find investing to be dull. But she also thinks that investing can seem intimidating, too, because of how it’s portrayed in the media and by financial professionals. “Since investing is not super exciting, they’ve found a way to make it look and feel more like gambling—which, although exciting, can also feel kind of scary,” she says. People might think that they don’t have the skills to learn something “experts” know, or the time. Some may also believe that investing in the stock market is too risky, and that it’s best to hold on to the hard-earned money that’s already in your control.
“And at the end of the day, when 76 percent of Americans are living paycheck to paycheck, why would anyone want to play a ‘game’ with their hard-earned money, when it’s hard enough to hold on to those extra dollars to pay bills?” she asks. “Based on how investing is often portrayed, it actually makes total sense that people fear it.”
Although the fear and intimidation surrounding investing is understandable, it’s also detrimental. According to a 2016 Gallup poll, 52 percent of adult Americans owned stock in 2016. And more than that, New York University economist Edward Wolff found that nearly all the stocks owned in the country are concentrated among the wealthiest households. This fact was summed up by NPR writer Danielle Kurtzleben like this: “Eighty percent of Americans together owned just eight percent of all stocks.”
So how can more Americans get into the stock market?
Malani says that it starts the same way it would for any financial expert: with education. First figure out how to resolve any debt, while also shoring up an emergency fund and any work-supported 401(k) accounts. Investing can be done with debt, Malani says, but it’s best to make a plan for how to resolve it as soon as possible. Next, learn the basics of investing.
“The first and most important lesson we teach is that investing is not gambling: Investing is a way for your money to grow over time, not overnight. And learning to invest is not as hard is it sounds,” she says. “Once you’ve taken care of your basic personal finances, you’ll want to turn to investing as a way to make your money work as hard as you do. The point of investing is to give your money a chance to grow while you aren’t using it.”
At first, it may feel as though you’re separating yourself from money that you could simply put into a saving account. But let that apprehension go. Malani says that inflation eats away three percent of a dollar’s value each year, and that the typical online savings account only earns about two percent of interest in that time. So in the scenario of simply putting your savings into an account, you’re losing money—about one percent per dollar a year. Instead, sound investing can make money grow over time, as long as you’re willing to wait.
Once you’ve figured out how much of your budget can go toward investing, Malani says that it’s vital to make that installment habitually. For instance, Swell makes it easy to automate investments every month, and allows you to align your funds with your goals and beliefs. At Swell, your present values and current finances can lead to more financial freedom in the years to come.
Much like witnessing a touching award speech, or watching an athlete cross the finish line, success can be more fun to watch at its peak. It isn’t as invigorating to see someone struggle through the pain and the patience leading up to a reward. But that required aspect of the story shows that success doesn’t happen all at once, just like wealth usually won’t be accrued in a single payday. Instead, it takes steady, informed steps of progress to reach goals—including financial security. These are the four key points Malani would tell anyone in order to shake off the fear of investing and to get started. We may not all become award-winning, athletically gifted geniuses, but with tips like these, much more of us can become wise investors.
Define your goals
“Know what you’re investing for, rather than what you’re investing in. If you’re looking for what to invest in, that leads to investing for the sake of investing,” she says. “That’s really no different than gambling. Once you know what you’re investing for, it’s easier to figure out how you should be invested. Obviously, you don’t have to have your entire life figured out today, but setting some financial goals will allow you to back into a sound strategy for saving and investing.”
“Anyone who says they are ‘invested’ in bitcoin is actually gambling,” she says. “If you’re looking for a quick-win or short-term success, you’re not looking to invest. Investing takes time to work and when done right, it will help you accomplish your mid and long-term financial goals. I’m taking anywhere from five to 15 or more years out. It won’t make you rich overnight.”
Tune out the noise
“As I mentioned, the media makes a lot of noise when it comes to investing,” Malani says. “They drive up the drama to drive up ratings. Wall Street drives up the drama, too, because they are paid based on commissions—so they want you constantly buying and selling or else they’re not making money. One of my favorite behavioral investing studies came from Fidelity a few years ago. They took a survey of all the various accounts held at the firm and found that 401(k)s were, by far, the best performing account for the average American. Why? Because most of us forget our 401(k) password! Sometimes ignoring your investments is the smartest thing that you can do.”
Automation is the key to success
“When it comes to investing, automation is a very powerful tool,” she says. “Invest regularly and consistently for long-term success. People who try to outsmart the market and pick-and-choose when they should invest their money almost always get it wrong. And that doesn’t just apply to the layperson—even Wall Street pros get it wrong most of the time.”