You only have to look at TikTok to know that personal finance has become progressively more “mainstream” over the last decade. Discussions once reserved for high brow newspapers, trading floors and white men sitting around tables at steak restaurants are now being had by more people in more places. It’s official: being good with money is officially a thing.
For most of us “normal people” – and by that I mean working people who weren’t born into money – our personal finance journey starts with a curiosity about budgeting, saving and wealth creation. We might have debt to pay off, maybe we read a book that inspired us to work smarter not harder, or maybe we just got sick of wondering where all our money went all the time. Invariably, our journey eventually reaches investing, and we make the decision to buy our first shares.
Money’s historical taboo has meant that investing has long been gatekept. Like a private club that you need a shiny gold card to get into, investing was reserved for those who had the money, the knowledge, or both, to get in.
Now though, the normalisation of financial conversions and fewer barriers to entry (thanks to platforms like Pearler!) shares investing is more prevalent than ever. In fact, according to the ASX, just over half (56%) of Australians hold investments outside of their principal place of residence and their superannuation.
The rise of personal finance content, influencers and media, alongside the growth of fintech, has created the perfect on-ramp for people who would never have become investors, to invest in their own future.
For most, this has closed a knowledge gap that had previously prevented them from ever investing in the first place. I for one had long-believed that investing was something for fancy, smart, wealthy people (read: men), and had absolutely zero knowledge about how to invest myself. I could balance a company’s books thanks to my accounting units in high school and uni, but that was the end of my financial know-how.
When you discover how simple investing can be, learn a thing or two about ETFs, and take that big deep breath and part ways with your first $500, you can become an investor relatively easily. Once the knowledge gap closes, you can make your first investment.
But then what?
Most non-investors would probably say they don’t invest because they don’t know enough. And that may well be true. But a knowledge gap only really holds you back from starting. The rest is all down to behaviour. Starting to invest is one thing. Staying invested is another. The behaviour gap is what we need to close if we want to stay invested and keep doing so regularly.
A study by HSBC Australia found that a quarter of Aussie investors don’t invest regularly. That means that a quarter of investors likely closed their knowledge gap, made their first investment (and perhaps some more after that), and then at some point stopped. Basically, their behaviour gap was still wide open.
I made my first investment at 29. Bright eyed and bushy tailed, I’d read the books, followed some social content, and signed up to a micro investing platform. I invested $20 and set up my round ups to invest my spare change. I understood the term ETF and loved dropping it into conversation. I knew enough to invest, and the knowledge gap that had stopped me investing before, was closed. But then I hit a wall. I knew how to invest, I just didn’t know how to keep investing. Once the initial shine of starting wore off, investing fell into the too hard basket. I knew what to do, I knew how compounding worked, I knew that investing regularly was the only thing that would turn my humble $84 balance into something more. In fact, investing was a lot simpler than I ever imagined it would be. No angry stock broker on the phone. No huge net worth required to start. So why did it take me a whole year to invest again?
Rather like going to the gym, I knew what to do, I just didn’t know how to make myself do it often enough to make a difference. That’s the behaviour gap.
Now, that bushy tailed bandit with an $84 balance sits here writing this blog to you with a portfolio of almost $70K. According to my Pearler year in review, I invest an average of 22 times a year. Not bad for the girl who invested less often than I wash my denim (read: rarely). So what changed? What was it that closed the behaviour gap?
Ultimately, it came down to a few things that shall henceforth be known as the 3 golden rules of staying invested.
The 3 golden rules of staying invested
1. Investing is boring
First, I realised investing is actually really boring. Like most things that pay off over time, there comes a point where you realise that it’s not always going to be as big and exciting and daunting as the first time. Allow me to call upon my fitness analogy once more. The day you declare you’re going to commit to getting fit is a big day. It’s an adrenaline rush. You sign up to the gym, buy the running shoes, set out your outfit and head off to start day one of your journey. You’ve done it! You’ve started! Look at you go!
By day 5 though, you realise “oh shit. I have to actually do this multiple times a week… for like… ever?”
Yeah baby. Investing is no different. That first investment is a big adrenaline rush. But your fiftieth? I’ve got to be honest. It’s not a whole lot more exciting than taking the bins out.
2. You need to know what you’re doing it all for.
Second, I started to work out what I was doing it all for. When you make your first investment, you’re not so much thinking about 10, 20 or 50 years in the future. But to stay invested, you have to have one eye on today, and one eye on tomorrow. Well, not tomorrow. But the future you’re creating.
To stay invested, you have to, well, stay invested. Invested in what you’re doing it all for. Because as we just learned, investing for the long term (aka the non-blokey-shout-y-day-trader-y way) is kinda boring. By design.
To do that, we have to make our future compete with the dopamine-filled day-to-day digital candy store we exist in right now. Everywhere you look you’ll find ways to spend your money for instant enjoyment. Our homes aren’t even safe from advertising anymore, as the brand name your friend dropped into conversation at coffee last week will inevitably follow you around the internet for the next week until you add to cart.
By spending some time thinking about the life that your investments are creating for you and connecting to that vision, you’re far more equipped to make the sacrifices you need to make to keep investing. Once you have that vision, find ways to experience micro moments of it in your current life to keep your investing journey interesting.
3. The beginning will feel pointless.
Third, I started to experience the benefits of investing. And no, I don’t mean passive income pouring in or being able to say I’d achieved FIRE. While I do enjoy smugly buying a coffee on dividend day knowing that the $37 I received more than covers it, I started to experience the benefits of investing on a deeper level.
There’s a concept in financial behaviour that I like to call The Pointless Phase. This is the part of any goal or pursuit where you’re doing the thing but you aren’t seeing the results yet. The Pointless Phase threatens even the most capable people, because it’s the part of working towards something where we’re most likely to drop off. It’s why most New Year’s Resolutions fall apart before January is even over. We suck at pushing past the pointless phase.
After my first few investments, when the sheen of becoming an investor had worn off, I was stuck in the pointless phase. I’d got my $84 balance and was wondering why I wasn’t rich yet.
Once I recognised that it was going to feel pointless for a while, I could knuckle down and just keep putting one foot in front of the other. I think this is the part of pursuing a goal or a change where we drop our ego, stop wanting everything to happen with minimal effort, and finally start actually doing it. I truly believe if you can push past this hurdle, no matter what you’re working on, you will succeed.
And so I did. I pushed through the pointless phase, and started experiencing the benefits of investing. When I hit my first $1,000, I had the privilege of looking back and thinking “wow, I did that.”
When I hit my first $10,000, I had the privilege of looking back and thinking “because of past me, I now have this balance that I could use for a big future goal like a wedding or going to The SuperBowl.”
Not kidding, I really want to go to the SuperBowl.
When I hit my first $50,000, I had the privilege of looking back and realising that I had a year’s worth of expenses invested.
While invested funds should never be your emergency fund (we need separate cash for liquidity purposes, people!), the fact I could, if I wanted to, sell those shares and not work for a year, felt really, really good. All those tiny micro actions had compounded into real world benefits.
And on top of these emotional benefits, I did of course start to see financial ones too.
The day I gave birth to my daughter, over $600 in dividends hit my account. How freaking cool is that? I was laying on an operating table numb from the chest down getting sliced open about to meet my first and only baby daughter, and the work of my past self was quite literally paying off. Right there into my bank account.
So if you’re reading this as someone who has started investing but hasn’t stayed invested, I hope this prompts you to get back on the horse.
Remember the 3 golden rules of staying invested:
- Investing is meant to be boring.
- You need to know what you’re doing it all for.
- The beginning will feel pointless.
You’ve got this!
