The Top 5 Reasons Americans Don't Invest Online

When inertia meets aspiration, nine times out of 10, inertia wins.

Nearly 600 individuals recently polled by NerdWallet offered all sorts of reasons they've avoided investing in stocks -- from fear of losing money to not knowing how to start, and back to fear (this time, that they don't have enough money to invest).

Here's a pictorial representation of the top five reasons investors gave -- when they could name a reason -- for not investing in the stock market:

Of course, all of this avoidance is to the detriment to one's financial footing -- both in the near- and long-term. And, frankly, the reasons people cite for avoiding stock market investing don't hold much water. So let's line those excuses up, and knock 'em down one at a time, beginning with...

1. "I don't want to risk losing any money"

On the face of it, that's a reasonable fear. Investors still licking their wounds over the Internet Bubble and the Great Recession certainly have reason to be leery of the stock market's ups and downs. But the cold, hard truth of the matter is that no matter how erratic the stock market can be -- up one day, and down the next -- avoiding investing in stocks because you "don't want to lose money" makes no sense at all.

Sure, the stock market is a scary place. Sure, you might lose money investing in it. But when you consider that the No. 1 alternative to investing in the stock market is putting your money in a savings account, well, you're guaranteed to lose money doing that.

Consider: Right now, the average savings account pays less than 1 percent interest. Inflation in an average year is about 3 percent. So simple math tells you that any money you put in a savings account today is actually losing you about 2 percent a year, as the value of a dollar gets eaten away at by inflation.

In contrast, over long periods of time, the stock market tends to generate pre-tax returns of about 10 percent per year. So really, the choice is yours. Take the "risk" of earning 10 percent, or enjoy the "safety" of losing 2 percent.

2. "I don't want to spend the time to do it"

Time? Pshaw! At the most basic level, "investing in the stock market" can be as simple as setting up an online brokerage account and buying a single index fund that tracks the S&P 500 ... and never touching it again until you need it.

Sure, you can spend a lot of time investing. But you don't have to spend a lot of time investing. One step, and you can hitch your wagon to that 10 percent average rate of historical returns, and let the market take over from there.

3. "I wouldn't know how to get started"

Well, OK. Then look it up. Seriously -- there are like a million and a half investment advisory web sites out there (or at least it seems like it). Yes, many are clamoring for a chance to manage your money for you (and take a cut of the action). But there is a ton of free education available. If you'd like a quick tutorial on the basics, try checking out the free investing lessons here on DailyFinance, or running through the handy step-by-step guide at The Motley Fool.

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Read a little and the mystique surrounding the topic will melt away along with the excuse of "I don't know how to get started."

4."I invest my money using a financial advisor or broker instead"

Well, there you go then. Assuming you don't mind handing your money over to a stranger to manage for you, knowing he'll probably charge you 2 percent of what you give him to do something you can just as easily do for yourself -- hiring a financial advisor or broker to do your investing for you certainly is an option. Maybe not the best option, but as a way to just get started with learning the concept of investing, it's a start.

Of course, the truth is that investing online is pretty simple, and you don't have to overpay an advisor to tell you how it's done. Check out those links above if you doubt.

5. "I don't have enough money to invest"

This is actually the most popular objection to the "Why aren't you investing in stocks online?" query -- and to an extent,
it's the one that holds most water. But you might want to qualify it and say, "I don't have enough money to invest ... yet."

You see, the key to successful investing is that you must give it time. As mentioned above, over long periods of time, the stock market tends to return 10 percent annual profits. But over short periods of time (like, say, 2000-2001, or 2008-2009), the declines can be scary before things perk back up again. So before investing in the stock market -- online or otherwise -- it's important to have first set up a reserve fund. Socking away three to six months' worth of living expenses is the general rule of thumb, which is enough money to cover your expenses in the event life throws a major curveball, and gives you a cushion so that you're not forced to withdraw money from the market at the worst possible time.

Once you've got that taken care of, though, "not having enough money" really isn't a problem. Don't believe it? Take a look at this list of online brokers that will open an account for you with no minimum initial deposit.

Turns out, "not having enough money to invest" isn't much of a problem after all.

Motley Fool contributor Rich Smith has been investing in stocks online -- exclusively online -- since 1997, and thinks that if he can figure this stuff out, probably anyone can.