One of the greatest sources of Anxiety for many of us is money. I have been a finance professional for nearly 30 years and I have seen all sorts of shenanigans when it comes to investing and money. This post is an opinion, when taking any financial advice you should always do your diligence and get educated from multiple different sources.
That disclaimer out of the way let me say that as someone with anxiety dealing with my finances has been extremely challenging at times. If you are reading this its highly likely that you are out there trying to make your way as best you can, and money/income is a serious issue for you. You want to have a good life and a good future, you are going to need money for that, and there is no use in denying it.
I am going to cut right to the chase at this point. Over time if you invest money wisely, you will have less anxiety. Yes that is correct, because income and assets = options. Having money, at least some of it, makes potentially stressful situations a nuance. Imagine a moment your car breaks down and it needs $800.00 in repairs. If you live paycheck to paycheck that’s a serious issue, if you have saved, over time and have say 5,000.00 in the bank the 800.00 payout, while painful, is WAY less stressful.
So how you do it:
- Set up an automatic investment from your paycheck. This can be through your employer or a company like fidelity, every paycheck money comes out and goes into your investments.
- Select “large cap” mutual funds. You don’t have to be an investment analyst here. Select mutual funds that invest in successful companies. If their portfolio includes companies like: Apple, Microsoft, Proctor and Gamble, Coke these are all established companies that make money.
- Do this for years. Yes, 1-3-5-10-20-30 years. That’s YEARS.
- At the end of one of these periods you should have a good chunk of money. The longer you wait, the bigger the number gets.
Sounds simple doesn’t it? It actually is, the trick is not panicking with every stock market move and staying consistent. The stock market goes up and down, some years the return is 20%+ some its -20% but on average you can expect from 7-10% return over 30 years. The trick is reinvesting your returns and compounding interest. Yes you can be more nuanced if you want but the goal here is to build wealth, through time with minimal amount of stress now and less stress later.
You stick with mutual funds that invest in large companies I’ve mentioned a few, here are a few more. Google, Amazon, McDonalds. Mutual funds that have large companies as their main focus are called “Large Cap”. Again you do not need to be an expert here, you are investing in a spread of companies that are industry leaders in their field, the chances of them losing everything is very, very low.
So, a simple example is you invest 100 dollars at 10% return you make 10 dollars. Year two you invest 110 at 10% return you make 11 dollars. So by year 3 we are at 121.00 and on and on. Now compounding this over time say 30 years? You’re going to have a nice nest egg. Think for a moment where you might be 30 years from now? If you could wouldn’t you want your younger self to be doing things to help you 30 years in the future?
Here is a link to the calculator I used, put in your own numbers see where you end up. Anxiety sucks, saving for your future might be the best thing you can do NOW that will help you relieve stress then. Imagine if you were a young child and you could do something then that would have helped you now, would you have done it? You are not only investing in the market but you are investing in your future mental health. Remember money/income = freedom/choices.
I know this post was very simplistic compared to other investing advice pieces, and for good reason. Investing doesn’t have to be intimidating and at some point you have to plan for your future and investing now, automatically every paycheck into mutual funds is more likely than not to provide you with a great nest egg later in life. It’s important to plan for your future and as individuals with anxiety it’s perhaps even more important for us to start now.