"I Can't Shake the Feeling That Investing in Stocks Is a Scam"
Taking on your biggest worries about money.
Welcome to the first reader mail-bag, where I answer your questions about money, investing, and personal finance.
Have a money problem that is stressing you out? Ask your question at the dedicated discussion forum here.
Reminder: Managing money is hard, you are doing your best, so don’t be hard on yourself.
What to do when investing feels like a scam?
Emily writes…
“I'm on VA disability and SS disability and I can't shake the feeling that investing in stocks is a scam. You can't depend on the future and the past can't predict the future, all you have is the present. My money is in high-yield savings accounts. I know that's not the answer either.”
The first thing I’ll say is that while a high-yield savings account is not going to help Emily grow her money, the very fact that she is saving money at all is what’s most important.
If you’re living a comfortable lifestyle and save some money every month, you are already winning with money.
But let’s get into Emily’s actual question, “how can I confidently invest in the stock market without getting scammed?”
Emily, you are not alone. A lot of people feel nervous about getting scammed, and for good reason. There are a lot of investment scams out there.
What is lacking in financial media and online discourse about investing are rational discussions about investing. By “rational,” I mean discussions about investments based on the facts.
Financial media personalities and online financial influencers make money by stealing your attention. That incentivizes them to make bold predictions about picking stocks or what will happen with inflation or the economy. They make predictions about unknowable things—and we wonder why people are nervous about investing?
Here’s the boring reality of investing: most people would be best served by buying an index fund that owns the entire stock market and sitting on it for 20+ years and stop paying attention to what’s happening day-to-day in the stock market.
It’s hard to find a resource to learn about investing that sticks to the data and the facts, so I created that resource myself.
On the homepage of this publication, you’ll notice a tab titled “The Rational Investor.” This is where I am releasing my book on investing chapter by chapter to paid subscribers.
The goal of the book is to make investing feel as safe and simple as possible. To do that, I present and summarize the work of the most brilliant financial minds over the past 50-years. I read over 100 academic papers on investing so that you don’t have to.
Some think of it as a book club hosted by the author of the book.
I look at it as the future of this publication: Group learning, where we look at the evidence and have real, meaningful discussions about how to use money to achieve a particular goal. In this example, we look at the evidence of the “Rational” way to invest.
If that sounds like a helpful resource, here is a 7-day free trial that will let you binge-read all the chapters so far, ask as many questions as possible, and decide if you want to stick around for the rest.
Here is the link to The Rational Investor.
When to sweat the “Small” stuff
K writes…
“Sweating the small stuff poisons my serenity. Not Sweating the small stuff poisons my real security….
…Expense tracking is critical. I never know if I can safely spend. My income is basically fixed and tight.”
As I said when answering the last question, finding more money to save is always more important than how you invest. If you are on a fixed income, it can be hard to find any money after paying for rent/mortgage and groceries.
Below is an expense tracker that has helped many readers in the past. Here’s what separates it from other expense trackers; it tells you how many hours you need to work to pay for each purchase.
If you clear $20/hour and buy a $100 pair of jeans, that cost you five hours of your life.
Try tracking your spending like this for a few months and ask yourself if you feel good about how you are spending your money and your time?
Eliminate spending on things you wouldn’t be willing to trade your time for, and if you can, spend more on the things you gladly trade your time for.
Here’s the expense tracker.
If you have questions about how the expense tracker works, leave a comment.
Have a money question you want answered? Ask it in our open forum.
This article is for informational purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any major financial decisions.