You hear it all the time that if you want to become rich, you must invest your money. While there’s no doubting the fact that to build true wealth you have to have your money work for you, I think that buying stocks may be the wrong move for most people. Now, for those shocked that I just made that remark, let me now get into why I believe you shouldn’t buy stocks in 2022!
As you already know, one of the most common pieces of financial advice floating around these days is the notion that you must invest your money. It seems like every finance video you watch and money blog you read is preaching the importance of investing early to maximize your lifetime returns and they aren’t wrong. It’s true that 99% of people need to invest their money to ever have a chance at amassing a nest egg large enough to carry them through their retirement years.
Now, obviously not everyone who hears this advice puts it to good use or maximizes their investing returns. For instance, I’m sure we both know someone who’s said they were going to start investing years ago yet they still have yet to open up a brokerage account. Then there are others who invest but only every time there is a full moon. Finally, we have those who do buy into the market but obsess over every market movement and give themselves hypertension in the process. This is all to say that many people make a run at investing but most don’t maximize the returns they receive due the lackluster approach they are taking.
Now, I will give credit where credit is due because at the very least, these people do want to see their money grow and understand that stashing your money in a bank account is like slowly setting it on fire and as inflation rates rise higher over time, the burning only starts to speed up. Therefore, yes, investing is essential in growing your wealth, however if you ask me there is still one mistake people make that we need to talk more about.
In my opinion, one of the best pieces of financial advice investing magnate Warren Buffett has ever given is that as an investor, you should never invest in something you don’t understand. It’s funny that this concept, that many would see as common sense, is really not so commonly applied. I mean, if you’ve ever talked to a casual stock investor…