Let’s Talk About Your Big “But”

The 1985 classic Pee Wee’s Big Adventure is one of my favorite movies. In it, there’s a scene where Pee Wee and Simone sit inside the Cabazon dinosaurs as she talks about her dream of going to Paris.

After encouraging her to follow her dream, Simone replies “I know you’re right, but…” and pauses. What follows might be the deepest line in the movie.

But what? Everyone I know has a big “but.”

He’s not wrong. How many times have you wanted to do something and followed the thought with “but…”?

This behavior pattern is more common than you think. The psychology behind it includes procrastination and avoiding opportunities due to fear of failure.

Obviously, this is not a self-help blog it’s an investment newsletter. So today, we’re going to talk about some of the common “buts” holding you back from your investing goals.

We’ll start with my favorite.

But… I’m Waiting Until I Have More Money

Many people claim that they don’t have enough money to invest. It’s as if they are waiting to reach some magic number before they pull the trigger. And that number is usually something in the range of 5-6 digits of cash.

You can get started with a lot less. I’m talking just $30. And let’s be honest, most of us can shave $30 off our spending over the course of a week or month to buy a single share of stock and launch your investment journey.

For income investing, we use dividend yield to measure how hard your money works for you. It’s the annual income you are collecting expressed as a percentage of the cost of yours shares.

Is 5% of $5,000 a lot more than 5% of $30? Yes. However, 5% of $30 is also more than 0. Start with one share. If the stock you like is pricey, no worries. Many brokers let you buy a fractional share of more popular stocks with higher share prices.

When you have more money buy another share! Over time, you will build a position that starts to pay you a meaningful amount of dividend income. The only caveat is to double-check that your trades are commission-free, which most brokers offer these days.

But… I Need to do More Research

If you wait until you know everything about, well, everything, you’ll never invest anything. And whether we’re talking about investing or trying anything new, you generally learn faster by doing, not by studying. You can’t get any experience until you get started.

Will you make some mistakes along the way? Absolutely, and that’s probably a good thing. The best investors I know made plenty of mistakes. Then they adjusted their strategy accordingly and made up for it on subsequent trades.

 I don’t recommend starting with a large amount of money. Start small, and I bet you’ll quickly become comfortable adding to your positions as you go.

And of course, keep reading your favorite analysts and asking questions along the way.

But… I Want to Wait Until the Market Settles

Ok, this one might get an eyeroll from me. The best time to start investing was the day you turned 18… the second-best time is right now. The market is due for a correction, fears of inflation are ramping up, and consumer sentiment is crashing… yet the S&P 500 continues to hit new all-time highs every week.

The S&P 500 might be the most commonly used benchmark of the overall market, but it is simply a weighted measure of a basket of roughly 500 stocks. At any point in time, there are parts of the market going up and parts of the market going down. And at any point in time, it’s important to make sure you’re getting a good price for your shares. We talked about some simple metrics to measure that last month.

Take the First Step

I’m not going to just point to our big “buts” and leave you hanging. If you’re in this position, the first step is to pick a broker. This is the trading platform that you’ll use to look up stocks and place your trades. Some popular ones are Fidelity, Charles Schwab, and Interactive Brokers.

Each one offers slightly different features, but at the end of the day, the most important one is commission free trading on stocks and ETFs listed on major US exchanges. These are the most common trades you’ll be making (at least at first).

Next, you’ll follow the broker’s instructions on how to add money to your account. Remember, you can start small and add more money as you go.

Finally, buy your first share. One of my favorite stocks right now is Pfizer (PFE). The pharmaceutical giant is going through a transformational period with the goal to return to growth by 2029. Shares are currently trading at just $25.81, with a current annual yield of 6.7%. No buts.

For more income, now and in the future,

Kelly Green