3 Reasons Why Not Investing at All Is Riskier Than Trying to Invest

Why sit out on something that can help you build wealth?

Imagine walking into a room and finding your significant other kissing a virtual stranger. Worse, they're on the floor. You're immediately sure that your SO is cheating, and you're furious. In a matter of moments, you make a series of life-changing decisions. It's not until an ambulance arrives that you learn the truth. Your significant other was performing CPR on someone who'd collapsed and stopped breathing.

And that's the problem with only knowing part of the story.

As humans, we're hardwired to make decisions on the fly. After all, our ancestors didn't have all day to decide whether to run as a pride of lions moved in their direction. To survive, we've learned to make quick and conclusive decisions. That very human habit can be good, saving us from unhealthy impulses. But it can also be bad because once we've made a snap decision, it can be hard to go back and rethink the situation.

A greater risk

Investing is all about ups and downs. When things are going well, you're far less likely to hear anyone complain. When the market is on its way down, whining becomes the common language of investors worldwide.

If all that whining and uncertainty has convinced you that investing is dangerous, we're here to offer a different perspective. We're here to tell you that not investing may be your most dangerous financial move. Here are three reasons why.

1. Retirement is going to be expensive

If you're saying "no, duh" at this point, stick with us. When we say expensive, we mean that you will run into expenses you may not have planned for. According to a study by RBC Wealth Management, the projected lifetime healthcare costs for a 65-year-old couple who retired in 2021 is a staggering $662,156.

Of course, that won't all come out of your pocket at once, and a portion of that $662,156 will go toward insurance premiums, but it's still a chunk of change.

Chances are, you won't build up a large enough savings account or earn enough investing in certificates of deposit (CDs) to cover the expense. Historically, the kind of growth you will need comes from a diversified investment portfolio.

2. You're missing out on the good stuff

This morning, I decided to look at my Solo 401(k). I'm unsure if I groaned out loud when I saw the balance or if it was in my head. Almost immediately, though, these stats from Hartford Funds came to mind:

• Between 1928 and 2021, investors experienced a bear market 22% of the time. A bear market is when investments lose 20% or more in value. On average, stocks have lost 36%. Sounds awful, right? However, the next stat makes up for the losses and then some.
• Between 1928 and 2021, investors experienced a bull market 78% of the time. A bull market is when investments gain 20% or more in value. More impressive is that stocks have gained an average of 114% during bull markets.

If you're not investing, that means you're missing out on the market when it's up and down. If you're sitting it out, your money has no chance of making the gains we've seen since the 1920s, and you're not taking advantage of all the bargains you can find while the market is depressed.

3. You're underestimating yourself

The biggest hurdle for many new investors is making that first buy. It feels so complicated, so foreign. We've all been there.

According to Warren Buffett, risk comes from not knowing what we're doing. Familiarizing yourself with one investment term at a time is a great way to get started.

When I first began, I made a list of investment terms I needed help understanding. It was on a piece of notebook paper and looked a whole lot like a Piggly Wiggly shopping list. I had things like:

• Bonds
• Asset allocation
• Exchange-traded funds
• Index
• Market capitalization
• Price-to-earnings (P/E) ratio

The list was much longer, but you get the point. I did not fully understand a single term, and that was okay. I was determined to learn about them one at a time, and that's what I did by seeking out the most straightforward explanations I could find.

I don't know when it started to sink in, but after a while, the things I read made sense, and a picture of how investing works began to form. By the time I was contributing money to an IRA, the terms felt familiar.

I know the list sounds corny, but one thing I fear is not being able to take care of myself financially. And I realized that building wealth was off the table if I was unwilling to learn enough to take the mystery out of investing.

I still make mistakes, and I sometimes have to change course, but that's because investors never stop learning. No one knows it all.

Avoiding the market because you're sure you'll lose all your money is like assuming your significant other is kissing some rando at a party. You won't know the truth until you get all the facts.