Investing In The Stock Market Archives

How Fantasy Football Is Just Like Investing in the Stock Market

How Fantasy Football is just like the Stock Market

The following is a guest post by Ben from YoungMoneyFinance.com about investing in the stock market. If you would like to write an article for Money Q&A, please visit our Guest Posting Guidelines.

A lot of us shy away from the stock market. It’s almost like we’re afraid of investing in the stock market. Sure, we know that we should invest our money, but a lot of us get nervous when it comes to doing so in the stock market. Too many ups and downs, too unpredictable.

Most of us write off our inexperience and lack of knowledge and decide to stay out of the market. However, we do spend a lot of time and energy on our fantasy football teams, and if you think about it, playing fantasy football isn’t all that different from investing in the stock market.

How Fantasy Football Is Like Investing In The Stock Market

LendEDU published the results of a very cool survey while we’re on the topic of fantasy football. Here are some of the interesting results…

The average season-long fantasy football player spends $286.84 on league-entry fees, while the average daily player (DraftKings, FanDuel) spends $272.52 on related fees.
The average player spends nearly 8 hours a week on fantasy football and 4.31 hours a week of work, or $1,186 in lost productivity if you factor in the U.S. median wage.
89.6% of season-long players expect a positive ROI this year, while 92.41% of daily players expect a positive ROI. Nothing wrong with a little confidence! Can we say confidence bias?

Just like managing a good stock portfolio…

1) Depth and diversification are key. A good fantasy team is made up of a number of different players, each playing a different role. A good stock portfolio also has different stocks playing different roles. You’ll have your growth stocks (ones you expect to grow in value) and your value stocks (less price appreciation but lots of dividends). You’ve invested in different industries, just as you wouldn’t have a team full of RBs.

2) You have your core players and ones you can easily trade. Your fantasy team is made up of several core players (what up Peyton!) and then your TBD players. Some weeks you’ll pick up a new player and give them a start or two and depending on how they do, you’ll either drop or keep them. Your core players, though, are your winners.

They’ve proven themselves time and time again and you’d never trade them. A good portfolio will have your winners and then stocks that you’re testing out. Don’t be afraid to buy a couple of stocks and then trade them out when they don’t live up to your expectations.

3) Perceived value. We each learn how to notice and pick up undervalued players when we see one. It earns us ultimate bragging rights. Conversely, we’re quick to trade a player while he’s still ‘hot’ when we know he’s going nowhere but downhill. Stocks are the same way.I’m always on the lookout for quality stocks that have taken a hit by the market. Perhaps some big investor has been trash talking them, or the company made a dumb mistake. It doesn’t mean they’re not a good company – rather, just that they are a good buying opportunity for me!

You’re Wasting Money Investing in Stocks

by Hank Coleman

There is a right way and a wrong way to begin investing in stocks. But sometimes new investors have to learn the hard way. A coworker recently talked to me about investing in stocks for the first time. He was proud of himself for finally taking the plunge into the market to buy a few shares. And, then I asked him what he had bought. He said that he had bought a couple of shares of Ford Motor Company (Stock Symbol: F). He also bought a few shares of some other well-known blue chip stocks like General Electric, Dow Chemical, Walt Disney, Coca-Cola, Dr. Pepper Snapple Group, and others. These are some great companies and a few that I own … Read more

Getting Over The Inertia Of Not Investing In The Stock Market

by Hank Coleman

Too Many People Are Not Investing In The Stock Market

Too many people are not investing. It’s especially true for millennials.

The inertia of inactivity keeps us from investing. People gave sworn off the stick market since the 2008 recession. Millennials are scared to invest.

But, that’s just an excuse. You shouldn’t be scared. We all know that we should invest for retirement, pay off our debts, and save for our financial goals. Our inaction was an issue before the stock market and housing markets tanked it 2008.

Over 90% of millennials say that they distrust the stock market and that their lack of investing knowledge make them less confident about investing according to a Capital One Investing survey.

State Street Bank also found that millennials are also holding a significant amount of their investment portfolios, over 40%, in cash. This is an alarming trend considering that we have seen historically low interest rates on savings accounts and money markets for over a decade. Young Americans are seeing their purchasing power erode by holding cash that they aren’t putting to work in their favor.

But, that’s not half of the story. When it comes down to it, we’re lazy. Not investing for our future is the path of least resistance. It’s easier to do nothing than to venture out from shore. We’re using the market correction and its turbulence simply as a scapegoat to ease our minds and sugarcoat our inactivity.

But, how do we get over that initial inertia of not investing in the stock market? It’s not easy. But, how do you get started? Here are a few ways that can help you get off the sideline and start investing again – or investing in the stock market for the first time.

Don’t Fight An Automatic Enrollment

Many employers now offer automatic enrollment for their new employees in their 401k retirement plan. You should take advantage of that benefit. Invest in your company’s 401k.

More and more employers are using an “opt out” 401k automatic enrollment. Meaning that employees must opt out of the program instead of signing up when investing in the stock market or other investments.

From your very first day of employment, your company invests a small percentage of your salary in an ultra-safe investment option such as money market funds or government treasuries.

But, it is on you, the employee, to change your investment choices from the automatic enrollment selection. A money market fund will not do much for you. In fact, it won’t even keep up with inflation.

You have to change what type of investment that you want. So, this is a great option. You’re half way there – your company already got you investing in the stock market. But, now you have to choose a better investment – maybe an index fund that mirrors the S&P 500 index.