Ignorance is not bliss…
As someone who has worked in the financial services industry for the majority of my career, I am isolated from the way the “average” American views the stock market. Because of this, I can sometimes be in for a shock when I have a conversation with someone who has such a vastly different experience and opinion of the market.
Last week, I was speaking with a friend of mine. In passing, she mentioned something about her company’s 401(k) match, which was excellent btw. Our conversation went a little something like this:
Me (big financial nerd, plus I just made some changes to my portfolio and was eager to discuss): “What funds do you guys use?” “How do you like them?”
Her: “oh I have no idea!”
Me (super confused, not quite understanding what she had no idea about): “What investments does your company offer you? Any interesting options? Anything fun?”
Her (now annoyed): “ugh I hate that stuff. I don’t understand it so I don’t pay attention. I don’t know how much I have in there now or what it’s invested in.”
Me: oh. Right…so how about the weather?
After that, I let the conversation go, but it just stuck with me and left me wondering – how can someone just ignore such an important part of their financial security?
I have had similar interactions with my peers over years and all of them have left me baffled. In an effort to try to understand why otherwise smart individuals would leave their investing life up to fate. These are people that do intense research to get the best prices on groceries, clothes and vacations, but don’t seem to care how their retirement or savings are doing.
In an effort to highlight how common this lassie faire attitude is, I thought I would profile a few people I know and their relationships to the stock market. This is non-judgmental, just me trying to make sense of how people tick when it comes to their investing lives.
Friend mentioned above
- Mid-30’s, married, no kids, works at non-profit
- Well-educated with a master’s degree
- Very frugal, hates spending and debt – excellent savings rate
- Owns her own home
- Learns how to fix everything around the home because she likes to learn and hates to pay others to do what she can do
It is the last bullet point that really shocks me as it relates to her attitude towards her 401(k). This is a girl that will hang dry wall and knock down walls in her home because she wants to learn how to do it and not pay a contractor. However, when it comes to her retirement savings, she refuses to learn about it. Her reasoning is “I hate that stuff.” After hearing this, it really struck me that there are so many people out there who have a passionate hate for anything Wall Street-related. I understand that Wall Street has had bad terrible press and many movie-worthy villains over the years. HOWEVER, by not taking the time to learn about this, she could be missing out on appreciation and income over the next 30 or so years.
- Mid-40’s, married, 2 kids, works in government
- Rents apartment
- Wife is a Stay at Home Mom
- Going to have a great government pension, plus a thrift savings plan (gvt 401(k))
This guy is funny. We see him at family functions and he LOVES to talk about the stock market with everyone. He is somewhat knowledgeable about the month to month fluctuations in the market as well as the current events that are triggering whatever volatility that is happening at the time. Also, he loves telling the story about how his dad was “going” to invest in Apple in the 90’s and if he did the whole family wouldn’t have to work anymore.
I never pry into people’s personal investing business, but since I have already had quite a few conversations with the guy, I casually asked him one day: “What stocks are you looking into these days?” He rattled off a few and discussed their merits. Then I asked “so which ones did you buy?” He looked at me with the most confused look I have ever seen. “What? I didn’t buy any of them?!? I have never bought a stock before.” After that, I was speechless, which is no easy feat. This is a person that I have been having frequent discussion about stocks for over a year who clearly is very interested in the subject. This person devotes much of his free time to researching but has never pulled the trigger. He didn’t even have a good reason. After that whenever he brings up the subject I need to walk away because I find the whole situation so odd.
Other Family member
- Late 20’s, married, one baby
- Both he and his wife have great jobs
- Owns condo, saving for single family
- Not particularly thrifty, but saves some $$
This is short but sweet. He works at a financial services company. We were out for a coffee this morning and he off-handedly mentioned that he needs to roll over his 401(k) from his old job – this was a job he left 4 YEARS ago!! 4 years of a BULL MARKET he missed out on because he doesn’t know what he is invested in!! He said that he never got around to moving it and never had the time to look up how to do it. Yeah right…..
Why don’t people pay more attention to their personal finances? Is it a lack of confidence that is keeping people from earning $$ in the market?
Now, I’m not saying the stock market is the panacea for all things personal finance. However, I am saying that by not learning about it because you are afraid of it is not a good philosophy or way to go through life.
The profiles above are very typical of the current trend of millennials attitudes toward investing, as you can check out in the links below.
What are you afraid of? How did you conquer your fears? What got you interested in investing in the stock market?