Like a lot of people, I once held a stereotype of what I thought investors were like: That they were predominantly wealthy, 60+ years old, and male. It’s unfortunate to report that after being two years in this business, accumulating my own investments, and meeting a lot of interesting people, that stereotype hasn’t been completely abolished in my mind. The good news is there’s nothing about age, wealth, and gender that qualifies someone to be an investor and disqualifies anyone else from also being an investor. So, let’s look at some of the assumptions about investors and see what shakes out.
Males make up 75 percent of the investor pool, while females make up 25 percent. This is a pretty crazy statistic considering women make 85 percent of consumer decisions and 91 percent of home-purchasing decisions. So why do they drop out when it comes to investing? I think it has to do with being risk adverse. And their inability to self-identify may lead to self-exclusion. This is frustrating and unfortunate, since that stat about making 91 percent of home-purchase decisions would suggest females are more qualified to invest than their male peers. But that’s not how it shakes out. If you are female and are considering investing but you are hesitant, I challenge you to question your assumptions by asking yourself: Why can’t I invest? What makes me think I’m not ready to invest? Is my money worth less than someone else’s? Are most older males that I know smarter than me? (You might smirk at that last one, but seriously — ask yourself that, because the stereotype is a loaded assumption.)
They Already Own a Home
It makes sense that you would assume you need to own a home first before investing, and 80 percent of investors do. Part of this is likely related to the fact that Home Equity Lines of Credit (HELOCs)— a.k.a. leveraging your existing property to get a down payment for your next property — are tied to your primary residence. That makes investing easier, but it’s by no means a requirement. The big difference when acquiring an investment verse a home is that an investment requires you put down 20 percent of the property’s value. Whereas a home requires 5 percent. And that’s built in because if the economy goes south, people are much more likely to protect their home than they are an investment. But let me repeat this: For an investment, have to put 20 percent down, and prior home ownership does not matter.
They’re Country-Club Rich
About 45 percent of investors make $125,000 or more a year. The other 55 percent make less than that. Approximately 30 percent make $75,000 or less. This is now more feasible. And here’s another thing: You don’t have to go at it alone. You can partner with friends who have a few grand here and there to leverage your way into acquiring investments.
The title of this article was a trick, because YOU HAVE WHAT IT TAKES. Assuming you have a job, you are interested in wealth accumulation, and you can do a little research, you have what it takes! But if you want to do more research and learn more about investing, check out two of my other articles (3 Reasons Aspiring Investors Never Land a Deal and 5 Ways to Know You’re Not Ready to Invest in Real Estate). Those can help you determine if you’re there yet or if there are things you can do to help get you there. And, finally, if you have questions, reach out. Ask me. This site is for helping others and I love engaging with each of you.
What other assumptions do you have about investors?
Share them below so we can break them down!