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Is Investing in the Stock Market Too Difficult for the Average Person?


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The stock market is a popular topic. It drives funding for some of the most important innovations, processes, and companies in the world. Stock market investing forms the backbone of many retirement strategies. Any time something is such a popular topic, myths about it begin to emerge. The stock market is no different.

Although some myths are harmless and even fun to explore, others can be devastating. One of the myths of the latter type is the myth that investing is too difficult for the average person.

Most people don’t learn anything about the stock market in grade school. As you get into high school, you may take part in a stock market simulation and get a general understanding of what stocks are, but that’s only if you’re lucky. If you’re like most, you head out of high school and into college or the workforce knowing little to nothing about what happens in capital markets.

When we hear something new with no history or understanding to refute the new idea, we tend to believe it. This has been the case for countless would-be investors over the years when they hear that investing is too difficult for the average person to accomplish.

You own shares of Apple, Amazon, Tesla. Why not Banksy or Andy Warhol? Their works’ value doesn’t rise and fall with the stock market. And they’re a lot cooler than Jeff Bezos.
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This belief has led to delayed entrances into the market, resulting in less comfortable retirements due to the loss of compound gains that would have resulted from an earlier entrance. The truth is that this myth is dangerous, and believing it can lead to you having to work through your retirement.

Where Did the Myth Come From?

The idea that investing is too difficult for the average person has become widely accepted, but it’s not true. So, where did the myth come from?

It starts with a lack of education. Without formal education on what the stock market is, most people are so undereducated in the topic that it seems too difficult to understand. Investing has its own lingo and involves a lot of numbers, making it seem foreign and abstract to someone who hasn’t been exposed to it before.

Beyond that, as an average American, you see three-piece high-end suits on Wall Street in a competitive, corporate setting. You see Rolex watches, Maserati cars, and only the finest shoes. Wall Street is where you see the picture of the high-rollers in the world of finance.

Throughout your life, you’ve been told that it takes hard work to make money. You’re told that those who make the most money have a skill that few others have. It’s why brain surgeons and astronauts make so much money.

So, it’s easy to come to the conclusion that investing is too difficult for the average person. Although the idea is a misconception, it’s easy to see why so many believe that the average person simply doesn’t have the resources or the gumption to make money in the market.

Proof the Myth Isn’t True

There are countless rags-to-riches stories in which a normal person made millions of dollars in the stock market. Here are a few examples:

1. Sylvia Bloom

Sylvia Bloom worked as a secretary at a law firm. She took the subway to work like most people in her area and lived a relatively modest life.

While she worked, nobody knew what she was doing with her money. Throughout her years as a secretary, Bloom was investing, and amassing a fortune in the process. All the while, she continued to work at the same law firm, maintaining her employment there for 67 years.

When Bloom passed away, even her closest family members and friends didn’t expect that she left much behind. However, her investments had paid off substantially. Sylvia’s fortune was spread across 11 banks and three brokerage firms. All told, her investments on a secretary’s salary grew to become about $9 million, $8.2 million of which she willed to charity.

2. Ronald Read

After serving in World War II, Ronald Read had to make a living. To do so, he took simple jobs, working as a gas station attendant and a janitor. He had a English muffin with peanut butter and a cup of coffee every morning at the local hospital and lived a modest life.

In 2014, Read passed away, leaving a $4.8 million donation behind to the hospital in which he had his breakfast every morning and another $1.2 million donation for his local library, giving away the majority of his $9 million fortune.

So, how does someone on janitor’s salary amass such a fortune?

When Read wasn’t working, he took time to learn about the market. When he was paid, he invested what he could, using what he learned in his research. Those investments turned his incredibly modest salary into a fortune that placed him among the top 10% by net worth in the United States.

3. Grace Groner

Grace Groner started a new job as a secretary at Abbott Labs in 1931. Three years later, she made the decision to purchase three shares of Abbott Labs stock for $60 each, for a total investment of just $180.

Throughout her lifetime, she allowed those shares to grow, reinvesting her dividends to buy more shares of Abbott Labs common stock. When Groner turned 100 years old — the age at which she died — she owned 100,000 shares of Abbott Labs stock. That worked out to be about $7 million worth of stock, generated from just $180 over the course of 75 years. The growth in share count was the result of several stock splits, dividend reinvestments, and general growth in the value of the stock.

She left nearly all of her fortune to Lake Forest College. While Groner never spent a dime of her earnings from her investments with Abbott Labs, those investments allowed more than 1,300 college students to pursue their dreams.

Why This Myth Is So Dangerous

Some myths are all in good fun; this particular myth is not among them. The myth that investing is too difficult for the average person has devastating consequences for those who believe it.

Building wealth in the market isn’t something that happens overnight. All of the above examples of average people who became millionaires due to their investments reflect stories of people giving their investments several decades to mature. There’s a reason for that theme.

The biggest part of the stock market’s wealth-building power is compound gains. This is the effect that takes place when your money starts to earn money. That money is then reinvested, giving you the ability to earn even more over time.

“Shark Tank’s” Mr. Wonderful once explained on the show that when he makes an investment, he looks at his money as little soldiers in a battle. Their goal in the battle is to go into an investment and bring back as many hostages — dollars — as possible, which can be turned into more little soldiers. From there, he deploys his original soldiers and his hostages to cover a larger area and bring back even more hostages.

The bottom line is that investments take time to mature. The more time you give them, the more time compound gains have to work and bring back more of what Mr. Wonderful calls “little soldiers.”

The power of compound gains is massive. To put that power into perspective, delaying an entrance in the market by just five years can cost you tens of thousands of dollars over the course of your investment.

In fact, if you were to start with just $100 and add $100 to your portfolio every month, after 30 years, you will have invested a total of $36,000. But if you earned average stock market returns over the course of 30 years, that $36,000 would grow to $218,498. If you delayed that investment by just five years, your ending balance would come in at just $129,396. So, delaying by just five years on a relatively modest investment plan could cost you nearly $90,000!

Simple Ways for the Average Person to Invest

At first glance, the stock market may seem to be a massive, convoluted instrument that’s difficult to play. As you dig deeper, you’ll quickly learn that there are several simple ways for beginners to start investing, even with little knowledge of how the market works.


Robo-advisors are technology-based services that allow you to start investing even if you know nothing about the market. There are several options out there, among the most popular are Betterment, Acorns, and Stash.

Investing with these platforms is simple. All you have to do is sign up, deposit funds, and let your money grow. Once you deposit funds, robo-advisors invest your money into their portfolios, which are generally well-diversified.

Because the robo-advisor invests your money for you, all control and research is taken out of your hands. Your only responsibility is to deposit funds and allow the algorithm-based approach to work for you.

Low-Cost Index Funds

For some time, Warren Buffet — one of the most successful investors to ever live — has advised investors to use low-cost index funds. In fact, he was once quoted as saying:

“A low-cost index fund is the most sensible equity investment for the great majority of investors. By periodically investing in an index fund, the know-nothing investor can actually out-perform most investment professionals.”

Index funds are mutual funds or exchange-traded funds (ETFs) that are designed to mimic the movement of the underlying index on which they are based. For example, owning a share of an S&P 500 index fund means that you essentially own a piece of each of the 500 stocks listed on the S&P 500 with relatively equal weighting to that of the S&P 500.

This highly-diversified approach allows investors to gain access to the overall market without having to undertake the tedious process of researching and picking single-stock investments.

Pro tip: If you don’t currently have an investment account open, there are several offering a new account bonus. When you open and are approved for a new Robinhood account, you’ll receive a free share of stock (up to $200 value). Check out all the current brokerage bonus offers.

Enroll in Your Employer’s Retirement Plan

The vast majority of large employers offer retirement plans, but that doesn’t mean you have to work for a large company to be offered one. In fact, according to Pew, more than half of the small- and medium-sized employers in the U.S. also provide retirement assistance.

In most cases, these plans offer access to a 401(k) or another tax-advantaged account that allow the employee to elect to invest a percentage of their paycheck in the retirement plan. More often than not, employers will match the contributions to a certain limit. For example, your employer may match your contributions up to 6%. This means that if you contribute 6% of your paycheck to your retirement plan, your employer will make additional contributions to your investment account equal to the 6% you’ve put up, for a total of 12% of your total income.

If your employer offers any form of retirement plan, it is wise to take advantage of it. These plans provide simple access to the market. Moreover, by maxing out on whatever percentage of your paycheck your employer is willing to match, you have the potential to double the returns a similar investment would allow for, effectively allowing you to passively beat the market.

Tools to Help You Become a Successful Investor

If you’d like to start investing, but would like more control over the assets you own than can be provided by a robo-advisor, index fund, or employer-sponsored retirement plan, there are several tools that you can use to become a successful investor yourself. Some of the best free tools include:

Money Crashers’ Investing Archives

Check out our investing archives for more articles centered around making you a more successful investor. We’ve compiled hundreds of articles, tips, and mini-courses in an effort to teach you everything you need to know to turn your money into more money, and we continue to build more resources every day.

Morningstar’s Investing Classroom

Morningstar is one of the most trusted financial firms on Wall Street today. The company offers a wide range of investing services, including research and a portfolio manager to track your investments and watchlist. Morningstar has also invested quite a bit into training material to turn beginner investors into pros.

Their training center is known as the Morningstar Investing Classroom. There you will find a wide array of intuitive lessons, diving into topics on both the fundamental and technical side of the investing coin.

In order to access the classroom, you will have to sign up for Morningstar, but you are not obligated to invest a penny with the company. All you have to do is provide your name and email address, and of course filter through the occasional advertisement in your inbox, and you’ll have access to all of the training the company has to offer.

E*Trade’s Knowledge

Finally, E*Trade is one of the most popular online discount stock brokers in the United States today. The company is best known for facilitating the needs of advanced stock traders at a steep discount to traditional brokers. However, it does have great tools for beginners and intermediate traders.

In fact, E*Trade has an entire section of its website titled Knowledge, where it provides training materials to turn beginner and intermediate investors into expert traders. There are several lessons here, grouped into four main categories:

  1. Investing Basics. The Investing Basics section covers all of the basic information that you should know before you make your first investment outside of robo-advisors, index funds, and managed retirement plans. The section teaches you the basic fundamental ideas behind investing and the basics of being successful in the market.
  2. Advanced Trading. From time to time, you’ll see a story about a day trader who made millions from nothing in no time flat. Although this is possible, day trading is extremely risky. To do it successfully, it’s important that you have the proper training. E*Trade provides a long list of materials designed to help you become a professional trader. These lessons are intense. So, it’s best to go through all basic lessons before venturing into the Advanced Trading section.
  3. Retirement Planning. Retirement planning is an important part of anyone’s financial life. Early on, the idea of planning for retirement can be confusing. The E*Trade Retirement Planning resource provides you with intuitive training materials that will teach you how to retire better by taking advantage of the capital power of the stock market.
  4. Tax Planning. Finally, income gained through the act of investing is taxable income. This income is taxed as capital gains. The returns you generate will be taxed in different ways depending on the type of assets you invest in and how long you own those assets prior to selling. The Tax Planning section of E*Trade’s Knowledge page is loaded with the information you need to reduce your tax burden as you invest.

Final Word

The fact of the matter here is simple. Investing really isn’t all that difficult. Sure, day trading might be difficult, but investing for your future is as simple as setting aside funds and putting those funds into the market in one way or another.

With so many options to access the market, even as a beginner with little to no knowledge of how the market works, not investing is a costly mistake. Unfortunately, that’s exactly what the myth that investing is too difficult for the average investor does — it causes many people to delay their entrance into the market, resulting in the potential loss of tens of thousands of dollars for each investor it delays.

So, don’t believe this myth. If you haven’t begun investing quite yet, you should immediately start creating a plan. Every day you wait is another day compound gains could be working for you!

Did you delay your entrance into the market because you thought investing was too difficult for the average person? If so, how do you think the delay affected your long-term returns?

Joshua Rodriguez has worked in the finance and investing industry for more than a decade. In 2012, he decided he was ready to break free from the 9 to 5 rat race. By 2013, he became his own boss and hasn’t looked back since. Today, Joshua enjoys sharing his experience and expertise with up and comers to help enrich the financial lives of the masses rather than fuel the ongoing economic divide. When he’s not writing, helping up and comers in the freelance industry, and making his own investments and wise financial decisions, Joshua enjoys spending time with his wife, son, daughter, and eight large breed dogs. See what Joshua is up to by following his Twitter or contact him through his website, CNA Finance.