Dispelling an Investment Myth – You Have to Be Rich to Invest

I was participating in an online discussion forum and the topic of investing came up. The person in question mentioned that the capital gains tax shouldn’t be low (they are currently at 15%) because no one would really benefit from such low rates because (I’m paraphrasing):

“you have to be rich to invest.”

Yikes!

I thought that this myth was pretty much dispelled a long time ago. I would argue that the reason that capital gains taxes are as low as they are is because it encourages Americans from all walks of life to invest in the stock market, real estate, and other securities. It would especially be beneficial to those who may end up living on a fixed income later in life.

Remember those film strips in elementary and middle school which covered such topics like safe sex and smoking that seemed just a little bit “dated”? Well, the link below is just one of such films. (Though not in filmstrip form, and no sex--it was 1957). It’s from the 50’s, but I still think the main points still apply. Hat tip to the Get Rich Slowly blog where I stumbled across this (it’s available on YouTube). Check it out here.

If you decide not to click through, the key points in this video (once you get past all the skips and jumps in it) talk about how to invest your money wisely using a dividend re-investment plan, or DRIP. You set aside a certain amount of money each month to go towards purchasing securities, and over time, you can amass a sizable amount of money over time.

Just to be clear, don't think you have to be rich to invest. In fact, the opposite is more often true. People get wealth by investing--investing not only in money, but also in themselves (through knowledge acquisition and giving back to their community). It simply involves balancing risk and not expecting the government to cover everything for you cradle-to-grave.