As someone who LOVES investing, it seems like such a no-brainer.
My first instinct is to say “OF COURSE!!! Everyone should be investing.”
Realistically though, investing in the stock market isn’t right for everyone, and here are some situations where a person might not want to get involved in the stock market, at least right now.
Disclaimer, I’m not a financial planner, and this is not financial advice. This is just an opinion based on a discussion I’ve recently had with a close friend, who is choosing not to invest at the moment.
If You Still Have High Interest Debt
Generally, investing in the S&P 500 returns somewhere around 10% per year. SOME people can get better returns than that, but it’s usually people who do it as a career, and they are usually very good at it.
Some credit cards charge between 20-30% APR, so you’re basically going to be losing money, even if the market does fairly well that year.
Due to the way compounding works, losing money drastically impacts your overall success. Having a couple years of losses can be devastating to a person’s overall net-worth.
If you have high-interest credit cards, you may want to consider dealing with those before you get involved with the stock market.
If You Don't Enjoy It
Enjoying the process can be extremely helpful.
The investors that do well are mostly going to be people who put a lot of effort into it, and those people usually do so because they enjoy it.
That doesn’t mean EVERYONE who enjoys it will get amazing results, but it’s significantly easier to go through the motions when it’s something you love.
Investing can get tedious fast, and it’s just not for everyone.
If You're Gullible
Unfortunately, financial publications, the media, and other investors, don’t exactly play fair.
There’s a LOT of conflicting opinions out there, and if you believe everything you read you may have a hard time.
Sometimes there is a major conflict of interest. If someone is stuck in a position and they want out, do you think they are going to tell other people to sell too? Some will. Some will go through great lengths to make the stock sound amazing so other people will want shares.
As much as regulators try to combat this kind of thing… it’s an issue.
Or take the recent Gamestop hype.
Gamestop isn’t even a very strong company anymore, and a bunch of people got caught up in the hype thinking “well Gamestop is a big name, and they’ve been around for a while, people say it’s ‘going to the moon and I can screw over the hedge funds’, so it sounds good to me”.
Next thing you know, within a week the stock had dropped by over 80%, and those investors’ year is now going to be a loss based on one decision at the beginning of the year. Ouch.
I still think you could learn how to not be gullible, but that’s not always going to be the case.
If You're An Entrepreneur
Entrepreneurs are special.
Making money is usually fairly easy for people with an entrepreneurial mindset, and the returns you can get from having your own business CAN dwarf the returns you’ll get from the stock market.
The most successful entrepreneurs, like Bill Gates, Warren Buffet, and Jeff Bezos, still participate in the stock market, but they’d be doing perfectly fine even if they didn’t.
As with anything else, success isn’t guaranteed in either entrepreneurship or the stock market, but your own business is a viable alternative IF you know what you’re doing.
If You Have A Hard Time Managing Your Emotions
Most of the time when I buy a stock… it feels like the price goes down immediately.
Or there are many times when one holding feels “stuck” and another is taking off like crazy.
These things affect your emotions when your hard-earned money is on the line, and you need to be able to cope with that.
Your emotions WILL get the best of you sometimes, and you’ll make bad decisions because of it.
If you invest based on those emotions all the time, you could be setting yourself up for disaster.
I feel a LOT of emotions when I invest, but I don’t make my decisions based on my emotions, so it works out, but if you can’t do that, then be careful.
If You STILL Want To Start Investing
If the reasons in this article don’t scare you, or don’t apply to you, and you want to start investing, make sure you take a look at our homepage where we have rated most of the major investing apps.
Investing can be highly rewarding, IF your situation allows you the luxury of getting involved. If not… then keep working at it, you’ll get there someday.