Common Investing Mistakes made by young peopleThe other day I stumbled upon an interesting article on Yahoo Finance and it really struck a chord with me. The article discusses three lies that millennials tell themselves about investing.

Technically, I’m not a Millennial myself; I squeaked into the tail end of Generation X. Even so, these three lies reminded me of the things I used to tell myself when I was younger.  Maybe they sound a little familiar to you too?

“I don’t make enough money yet to start investing.”

When I graduated college and landed my first full time job, I wasn’t making very much money. It was just an entry-level office position but it paid a heck of a lot better than the part-time jobs I had during college. I was excited that I could finally afford a car and dinners out with my friends, but I certainly didn’t feel rich.

I also didn’t think I was earning enough to start investing. I was still living paycheck to paycheck and I didn’t have much left after paying my bills each month.

I told myself I was still young and had plenty of time to make it up when I started making more money, but a funny thing happened. Every time my income increased my spending would too.  That’s called lifestyle inflation.

Eventually I realized that I was just running in circles and wasting time. I took a good, hard look at my spending and cut out anything unnecessary so I could ramp up my savings.  Better late than never, but I still kick myself for missing out on all that time I could have been investing in my future.

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“Investing is only for professionals and finance majors.”

Similarly, I used to tell myself that I didn’t know enough about investing and I should wait until I knew more before I got started. I figured investing was a complicated topic and I had to spend a lot of time learning all about it before I actually invested any of my hard earned dollars into stocks or mutual funds.

After all, there were so many different options out there. What if chose the wrong one?

Of course, investing doesn’t really have to be all that complicated. In fact, I would argue that the simpler you keep things the better off you’ll be. Pick a nice index fund with low expenses and you’ll beat the returns of most investors.

“I need to buy stocks in individual companies.”

If you’re looking to invest in a single company, there are literally thousands and thousands to choose from.  It’s impossible for professionals to familiarize themselves with every single option, so what chance does a small time to investor like you have?

Fortunately, you don’t have to choose an individual company. In fact, you’re much better off spreading your money into many different companies. Remember the old saying about not keeping all your eggs in one basket.

No matter how solid one company seems, things can always go south (Enron anyone?). If everything you have is invested in that one company you’ll lose it all, but if you diversify and invest in many places you’ll be protected if any single company falters.


Have you caught yourself saying these things when you were young?  If you are young, do you say any of these to keep yourself from investing?

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  1. When I talk to people about saving the #1 excuse you listed is normally the first thing that gets thrown at me. I realize that its a mindset and it doesn’t matter how much you make, even if you can only save a dollar. A dollar a payday will add up to more dollars.

  2. I told myself all of those lies when I was in my early 20’s. Fortunately, I started investing in my late 20s and haven’t looked back. I definitely wish I had started earlier!

  3. Too many people think that only rich people can invest. That is just not true. Investing just a few hundred, or even just $100, can get you somewhere!

  4. I kick myself for not investing more when I was younger. Even in college, there were some summers when I made pretty good money while I had almost no expenses. I’d have a much bigger nest egg at this point if I’d been thinking about the future.

    1. Me too Kim! I thought because I was in massive debt, I couldn’t afford to invest. I was mistaken. I lost out on some good quality interest earning years! Hindsight is 20/20!

  5. I succumbed in my 20s to investing with individual stocks because I was looking to get rich using shortcuts. Didn’t happen and I lost more money than I made. There is a place for individual stocks in a well-balanced portfolio (that includes mutual/index funds) but they shouldn’t be the only thing you invest in.

  6. I’m glad I started investing in my retirement savings account with my first paycheck (at my first “real” job). I don’t have other investments outside of that, but it’s a good start at least.