Ramit Sethi is a well-known money and he is not afraid to speak out his own thoughts. He is the best-selling author of the book "I Will Teach You to Be Rich" and the host of the Netflix series "How to Get Rich".

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In a recent newsletter, Sisi shared the biggest mistake people make when it comes to money: letting money sit in checking accounts. Instead, Sisi explained that money is important to people’s investment.

He is not wrong: According to Charles Schwab's 2024 Modern Wealth Survey, 58% of Americans have investments. Although this is the majority of the population, there are still a large number of people who do not.

There are many reasons why people decide not to invest. First, in order to invest, people need to have extra money to allocate their investments – not everyone can work on a job that automatically invests their funds into a retirement account to make investing easier.

According to a 2024 study by the Bank of America Research Institute, one in four people currently have a salary to pay. As the prices of everyday goods rise, it is difficult for people to prioritize investment when trying to afford groceries.

Another reason is that some people don’t trust the stock market and prefer to keep cash in their hands rather than risk losing it.

But Seth explained to his followers that investing is a free way for people to be financially free. Due to inflation, the value of cash sitting in a checking account will erode over time, and with investment, funds are likely to grow and exceed inflation.

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Sethi recommends that people invest in target date funds or index funds instead of hot stocks. He explained that investment involves a long-term strategy, and the target date fund will mostly be phased out. With these funds, people can choose the year they plan to retire, and as that year approaches, the fund will automatically adjust to become more conservative.

Sethi also praised index funds, which are funds that mimic specific indexes, such as the S&P 500.

With index funds, investors buy portfolios of stocks or bonds. In this way, it is natural. If a company performs poorly, the fund still has several other things to balance performance. Index funds also have lower fees, which can help investors retain more money.