You Need to Start Investing, NOW!
As the title says, you need to start investing now. A better time to have started investing was yesterday, a worse time would be tomorrow, so it has to be done now.
I could tell you how much money you've missed out on by not investing, especially when stock 'X' went from a very low price to a very high price. I could tell you that you would have made a fortune by investing in a specific index fund. But I won't start there, because if you're not invested, none of those things mean anything to you.
What I will do though is explain to you my thoughts on why you should be investing. I'd also like to share with you the way I view investing. In between, and around those topics we'll discuss why people don't invest, why they are fearful of the markets, and why there isn't much to fear but fear it self.
Why You Should Be Investing NOW!
I'm going to focus on stock market investing, but real estate investing works just as well. There are people that will debate which is better, stocks or real estate. I'll let them debate that. What I'm going to do is tell you why I invest in stocks, and why The Seville Report focuses primarily on equity investing. If this motivates you to start investing in stocks, great! If it motivates you to invest in real estate, also great! You're investing, and really that's all that matters.
Investing is the great wealth builder. There are serveral quotes by men and women more famous than me who have explained that no one gets rich by working and saving, and it's true. You need a multiplier, something that can turn that dollar in your pocket into more than a dollar. Investing can do that.
There are misconceptions out there that you have to be rich and very smart to invest, both are wrong. First, you do need to have money, because you're buying an asset, and those aren't free, especially the ones that go up in value. But you don't have to be rich to start investing. Second, you don't have to be a Harvard graduate to invest or even make really good money from investing. If you can read and do fifth grade math you can start investing.
In addition to being able to read and do a little bit of math, there are a few other attributes that can make you really good at investing. Being patient is one of those attributes. Patient investors usually make more than impatient investors. Also, being open to new ideas can help you become a really good investor. The ability to read, process, and apply what you've taken in quickly will also make you a great investor. But you don't have to be a great investor in order for the markets to increase your wealth, the markets increase the wealth of average investors all of the time, and even bad investors sometimes.
But Really, Here's Why You Need to Invest
The reason you need to invest now is because American businesses are increasing in value almost by the day. Companies that make the items you use, wear, or eat are increasing in value, and you're helping them increase in value everyday as a consumer, and you're also helping me as a shareholder, but you're not helping yourself.
Let's look at two companies that you may have heard of before, McDonald's (MCD) and Johnson and Johnson (JNJ). McDonald's, home of the happy meal and Big Mac. Johnson & Johnson, manufacturer of Johnson & Johnson's Baby Powder, Tylenol, and dozens of other products.
In the 13 year time span from 2007 to June 2020, McDonalds gained 275%, in that same time span Johnson & Johnson gained 96.3%. For every dollar invested in McDonalds in 2007, it added $2.75 to your dollar. Johnson and Johnson added $0.96 to every dollar invested in 2007. The stock market is a money multiplier, use it to multiply your money.
These are companies you know, making products you consume. These companies are increasing in value, and you know this because you're buying their products, or your friends, co-workers, or neighbors are buying their products. And this doesn't just apply to consumer products.
Are you a renter? It's possible that your residence is a property within a Real Estate Investment Trust (REIT). REITs are investment instruments that hold a portfolio of real estate investments, residential, commercial, houses, condos, hotels, cellphone towers, it all depends on the REIT. But your rent payment could also be benefiting shareholders all over the globe. In a REIT your rent payment is collected with other rent payments, broken up and paid out to shareholders as dividends. To REIT shareholders dividend payments are like rent checks, but without the hassle of buying a property, renovating the property, and then collecting the rent. You should invest so that you can collect rent/dividends through REITs.
You should invest so that the next time you see someone purchasing a Big Mac, you can thank them for supporting your business. Which brings me to the another reason you need to be invested.
Owning Businesses Without Running Businesses.
Investing in the equity markets gives people the ability to own businesses without running the businesses. To own a McDonalds outright you would need a $45,000 franchise fee, a $1 million to $2 million dollars to get your location up and running, and McDonalds requires that you have $500,000 of non-borrowed personal resources. In addition to all of that, you need to hire a staff to work in your McDonalds. But for $175 per share (price per share at the time of this writing) you can buy one share of McDonalds and participate in the success of McDonalds. With just one share you are an owner, and that's big.
This is how I view investing for myself and this is how I encourage others to look at investing. A stock is a piece of ownership in a business, but the way investment related media, The Seville Report included, talks about stock prices at times, it can lead someone who doesn't invest to believe that daily, weekly, and even monthly price moves are all there is to stocks, and that every day someone is either making millions or losing millions, and that's not really the case.
In between the billionaire portfolio money managers making and losing millions of dollars, there's a group of everyday people investing, who watch their portfolios grow in value year-over-year. These people aren't multi-millionaires, but they likely will end up being millionaires. These people are just like you and me, working everyday, doing their best to provide for themselves and their family, but they've made investing a priority. A couple of shares here, a couple of shares there, some dividend payments reinvested, and over a few years, a few thousand dollars becomes $25,000, a few years later, that becomes $40,000, and on, and on, and on.
There are so many reasons why people don't invest. Many haven't been taught to invest or have been told the stock market is a scam. Well touch on the reasons why people don't invest in part two of this blog post.
But for now, you need to invest because the stock market is a money multiplier. Your consumerism is helping publicly traded companies and their shareholders, but it's not helping you. Investing provides you the opportunity to own a business without running a business. Also, you don't have to be rich to invest, and you don't have to be very smart. You only need to be disciplined to prioritize investing over other things you normally do with your money.
See you on part 2.