How to start investing if the stock market scares you

GDP plummeted in July, sparking recession fears and worrying many Americans about their financial future. This fear can even lead some to avoid investing altogether, or to panic and sell current stocks.

But it shouldn’t.

For first-time investors who may be scared of the current market, Wall Street “Wolfette” Lauren Simmons offers advice: Ignore how you’re feeling.

“Warren Buffett says you should never invest in emotion,” the 28-year-old tells CNBC Make It. “So if you’re investing out of fear or you’re really excited and you’re chasing something, no.”

Buffett, investment legend and CEO of Berkshire Hathaway, doesn’t let current events or news influence his investment decisions, he said on CNBC’s “Squawk Box” in 2018. No matter what, “we’re going to buy the same stocks today that we bought last week,” he said.

That’s because changing your investments based on emotion is contrary to long-term investing. Instead, if you’ve found a company worth investing in, stick with it. “If you’re not willing to own a stock for 10 years, don’t think about owning it for 10 minutes,” Buffett said in his 1996 shareholder letter.

Simmons agrees. “Long-term investments always last,” she says. “We don’t have to watch the stock market every day. It’s like watching paint dry and you have a heart attack.”

It’s also important to learn as much as you can before investing, says Simmons, who became the youngest full-time trader on Wall Street at 22 and is on track to make $1 million this year.

“You won’t miss an opportunity if you don’t invest today,” she says. “Really take the time to invest.” It took Simmons herself two years to figure out what kind of investor she wanted to be.

Simmons emphasizes the importance of understanding your risk appetite as well. If you have a high risk appetite, you might be able to invest in speculative assets like crypto, Simmons explains, while a more conservative investor might put money in savings accounts despite the low interest rates.

Most investors fall somewhere in between, investing in a mix of bonds and stocks depending on their individual goals.

Of course, if you are not in a good financial position to invest, wait. If you don’t have any savings or are constantly in debt, “please don’t invest your money,” says Simmons. “Just take [your] Time. Educate, educate, educate – and then invest.”

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