1. “If I were to invest my money in the stock market, I might lose all of my money if the stock market crashes.”

The stock market can be a volatile place on any given day due any number of events that can shake up markets. Over the long term is what’s important when investing in the stock markets.

Since 1925, over any one year rolling period the stock market has positive returns 75% of the time.  Over any three-year period, the stock market is positive 83% of the time.  Over any five-year period, the stock market is positive 88% of the time.  Over any ten-year period, the stock market is positive 94% of the time.  Finally, over any twenty-year period the stock market is positive 100% of the time.

2. “The stock market is for rich people; it’s too expensive to hire a financial advisor!”

With the rise in use of robo-advisor investing tools and other fintech product solutions, even the brand-new investor can now achieve what used to be only reserved for the wealthy and could afford expensive financial advisors. Robo-advisor tools can provide you with professional asset management with very low costs.

In 2021, you can expect to see many new consumer friendly financial technology products coming to market.  The entire world of finance will be at your fingertips.  Anything from robo-advising, insurance technologies to financial planning and neo banking, all from your mobile phone, available 24/7.  We offer robo investing options for as little as 0.45% annual management fee.

3. “I’m better off keeping my money in safe cash than risking it by investing in the volatile stock market.”

While keeping your money in cash or a cash equivalent type security may give you peace of mind to sleep at night however it can be very costly in the long haul. The average bank savings account, money market fund or any other interest-bearing account is currently paying very close to 0% interest.  So, this means while your money may be safe from losses, it will also be sitting stale earning little to no interest.

Did you know that since 1925 the average rate of inflation is equal to 2.9%?  That means on any given year the average cost of living increases by 2.9%, which means goods & services are more expensive year after year.  Meanwhile your cash is earning nil and ultimately going backwards when factoring in inflation.

The average stock market annualized return since 1925 is just over 10% per year over the long haul.  You’ll need to grow your money in order to keep ahead of inflation.

4. “I can’t afford to save for retirement, at least not enough to make a difference…”

Even small amounts contributed consistently can add up over time. One of the biggest misconceptions I’ve ever witnessed is the number of folks who just don’t believe they can make a difference and thus opt to save almost nothing.

Let’s think about saving and investing for retirement like this… you start with small but consistent contributions that begin to grow and build into a nest egg that will eventually turn back the other direction, rather than contributing monthly, you’ll begin withdrawing monthly from your retirement portfolio.

Example, if you had forty years to retirement (anyone aged 27 or younger) and began saving $100 per month it would eventually result in a portfolio of money that could pay you out $1,171 month for retirement cash flow.  If you saved $200 per month it could result in a portfolio that could supply you with $2,343 per month in retirement.  If you save $300 per month for retirement it could create $3,514 per month in retirement cash flow.

5. “I know I need to save for retirement, but I have expenses so I’m going to put off retirement saving for now… but I’ll catch up later!”

Waiting to begin saving will cost you far more than you think. The earlier you start, the better.  Here’s an example, if you save $200 a month for 40yrs it will create a monthly cash flow back to you in retirement in the amount of $2,343 per month.  Time is the most powerful component to this equation.

Here’s why, if you save $400 per month for 30 yrs (ten years less) it will create a monthly cash flow back to you in retirement in the amount of $2,000 per month.

See how important those extra ten years of saving and compounding make?

Note from Virtual Dan: Hope this cleared up some misconceptions of personal finance! I created a super easy process to open a Fidelity Investments IRA, Roth IRA or taxable brokerage account managed by me. Contact Dan@firstmasonfinancial.com.