We are Terrible at Assessing Risk: Invest Better, Invest Often, Be Less Scared

Lake
Terribly Dangerous!! Caution…and More Caution!!

On Halloween I was teaching a lesson on risk assessment and fear to my class of 9th graders.  We talked about how they fear clowns, but 99.999999% are just fun people trying to get a laugh.  We talked about how they fear sharks in the ocean, but on average there are only 19 shark related deaths globally each year, and millions of swimmers daily in the oceans.  It turns out that there about 270,000 walking related deaths each year globally, so you have a better chance of dying walking to the beach than by a shark.  Don’t even get me started on drowning deaths in backyard pools.  Just don’t get a pool if you don’t want to watch your young kids like a hawk!  (I was a lifeguard for my teenage years; I saved many young kids)  But what about investing?  What are our fears?

The dot com crash, the 2008 crash, and all the other crashes seem to be what keeps people from investing in the first place.  I hear from people all the time that, “I don’t want to loose it all.”  I usually ask, “Who do you know who lost it all?”  They always have a friend of a friend of a friend story.  We have a fear of loosing al our money because of a story we tell ourselves.  We fear the unknown mostly.  Because we have never invested in anything, and don’t understand it, then we fear it.  It all comes down to ignorance and we assume the worst.  (Assume= Make as ASS out of U and Me)

I love statistics and Hans Rosling is a Swedish social scientists that can break down why we are ignorant on so many things with his moving numbers.  (I highly suggest you watch all his TED talks)  He has started the ignorance project to help people understand their world better.  He came up with a few life hacks with his son, Ola Rosling, to help people understand world trends better and fear less.  Here are the thoughts that are statistically proven to be the case most of the time.

  1. Everything gets better over time (Invest now, hold long term, it’s getting better over the long haul)
  2. The rich and the poor are coming closer together (most people are in the middle of the wealth gap, meaning more people are middle class and investing)
  3. Social change is happening globally (more schooling, more electricity, more stable govt.), creating more global wealth. (More wealth= More investing= More profits because of social growth)
  4. We exaggerate our fears (very few people die from sharks, so we shouldn’t fear loosing all our money)

Here is the video of the TED talk with Hans and Ola Rosling.

So what is the easiest way to start investing today?  It is as easy as downloading an app on your phone and off you go.

I use Stockpile for my individual stock purchases at fractional shares.  You can buy $1 of Apple Stock!  Yes investing is that easy.

I use Stash for Exchange Traded Fund’s that track the markets and automated buying is easy with Stash.  Again set it up for $5 a month and forget about it, and you’re investing.

I use Personal Capital to track my IRA’s, 403b, Kid’s college fund, and other investments that are automated from my early days with a financial guy.

I use Coinbase to play with cryptocurrencies, and you can buy fractions of a Bitcoin if you want.  I own 5% of a bitcoin for fun! My $200 is almost worth $400!  If I loose it then I’m out $200, nothing to fear.

I am now looking for an easy to use platform to trade WEED stocks.  (If you know any let me know, so I can research them)

There is also Robinhood, Ally, Questrade for Canadians, E-Trade, Fidelity has a app, and many others to get you started in your investment journey. (check out my freebies tab for affiliate links)

Remember the world is getting better, there is more global wealth, and we exaggerate our fears.  It turns out that in America only 54% of Americans have taken advantage of the Bull market these last few years.  You have to get your money to work for you.  It will go down somedays, but over a long period of time you will statistically win and have more money.  Just automate your buying and when the price drops keep buying, and when the price goes up keep buying, and in the end it all evens out for a long term profit.  If this up and down drives you crazy, then just automate you investing with the apps and forget about it.  Only look quarterly or yearly on your birthday for a nice little surprise.  I didn’t look at my accounts in 2008 at all, but lately they are going up a lot, so I look weekly at how they are doing.  Just don’t fear your exaggerated worries and get started today.

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One Comment

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  1. Yes yes and yes! There are so many ways to start investing / savings nowadays that I don’t know how can someone still be clueless about these methods / apps and how to get started! I mean, the hardest part now is to find one or many investing methods which works for someone and stick to it, but the key is also that people (just) have to start first! Ok and maybe learn a bit more about finance related stuff at first hehe.

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