A few days ago, I met a 22-year-old young man who disclosed to me that he’d opened an IRA account.
I was impressed at the fact that he even knew what an IRA account was, given his background. He was an African-American male from a low-income household; terms like “investing” or “IRA” are typically not terms you hear in a low-income household.
I asked him how he learned about IRAs. His answer was “by reading”.
I then asked what stocks he owned. He told me that he did not own any stocks…because he was afraid to.
I suggested that he buy a copy of my investment guide, The Stock Market is For Everyone, and let me know if he had any questions after reading it.
Fear of the stock market is a sentiment shared by many people. Especially minorities. It was a major motivation behind my writing this guide to begin with.
When you grow up in a family that is financially illiterate, you learn many things about personal finance – and most, if not all of these things, are wrong.
You don’t learn the importance of net worth.
You don’t learn the value of having good credit.
You don’t learn to stay out of debt.
If you hear about the stock market at all, the only thing you learn is that it is just for the wealthy. You may also have been told that it’s like gambling, and that the market is “rigged”.
It’s interesting how someone that knows absolutely nothing about the stock market can come to these conclusions!
Like I’ve said in the past…ignorance is not bliss!
Here some reasons why you shouldn’t be afraid of the stock market:
1. The stock market has an upward bias. From 1932 to 2019, the Dow Jones Industrial Average has gone from 800 to over 26,000.
2. The stock market is the single best wealth-building vehicle for the average person. Investing a modest amount in some of the great companies of our time could have created incredible wealth for you over time.
3. Understanding the stock market will make you better at managing your personal finances.
4. The stock market has bounced back – and bounced back BIG – from EVERY crash throughout its history. In fact, the bigger the decline, the stronger the bounce back!
Fear of losing money in the stock market is common among people with very little knowledge of how it works.
For many years, I was one of those individuals. I did not fully understand how the stock market worked, and I was uninvested. For me, it wasn’t because of fear that I stayed out of the market. It was due to a lack of historical knowledge of the stock market’s ability to create massive wealth by simply buying and holding stocks.
Click the image of the book at left to be taken to its Amazon page. (Disclosure: As a participant in the Amazon Services LLC Associates Program, I earn a small commission on each sale generated through these links.)