money health weekly


Why It Is Hard To Invest

investing can be simple, but it's not easy
❝Rip Van Winkle would be the ideal stock market investor.❞ -Richard Thaler

Sean walks over to take a look at an order that just came in. It's 1999, and we are cooks at a local family restaurant. It's pretty slow, so it's just the two of us working. Sean works two jobs, including this one. His other job is at Walmart. I just recently read an article about how Walmart employees receive stock options. I have a surface-level interest in investing and get really excited when I read stories about Walmart employees who got wealthy because of their Walmart investments. Similarly, I feel a mixture of excitement and envy when I read up on people who were early investors in Microsoft. I live paycheck to paycheck, and I think about the day when I can become wealthy by being an early investor in some company.

Five years later, I'm working at a bank talking with Peter, my friend and co-worker. He is reading a personal finance magazine that lists the mutual funds that did well over the past year. I find myself looking at these funds with the same mixture of excitement and envy then I felt before. I look at these fund returns, and some of these funds have more than doubled in the last year. Again, I find myself dreaming about the days when I can invest in funds that double my money in a year. Then all I have to do is keep doing that, over and over again. That sounds fun!

Almost 20 years later, I look back and see the error in my thinking. Overnight millionaires are not the norm. The future is unpredictable. Yet this is what so many people, like myself in the past, believe investing is.

It took a decade and a half for me to unwind what I thought investing was. I now understand that investing can feel intimidating to newcomers who believe what I used to believe - that investing is an exciting place where you make money quickly. I also understand how easy it is to fall into the cycle of trying to strike it rich and failing over and over.

Although investing can be simple if you do it right, it's not very easy.


Many of us are taught that investing should be exciting. It should be about putting our money towards some investment that will double, or even triple, in a short amount of time. It's easy to find stories about overnight millionaires. Any time spent on a financial news channel will have you thinking that it's easy to tell when it's time to sell your stocks. The message is that investing is like gambling but easier and less risky. All you have to do our find winners before they are winners.

Therefore, we are conditioned from a young age to believe that buying investments when the price is low and selling those investments when the price is high is not only possible, but also the best strategy. Then, we're told, we simply repeat that process over and over again.

Unfortunately, it's never that easy. This process has a name, and it's called