Top 4 Reasons Why You Should Start Investing Right Now
Updated: May 22
There are only two ways to make money in our modern world. The first way is to earn an income, either by working for yourself or for someone else. The other way to grow your money is to invest your money or assets so that they increase in value over time.
So in order to build your wealth, you will have to invest your money. Investing money allows you to put your money in a machine that can increase the value of your money.
Anyone can start investing money on their own level. It doesn’t matter how much money you have or how old you are. It does not matter how much you know about investing, the idea is to start investing and learn as you go. Surely, you will make some mistakes just remember the act of starting is much more important than getting it right straight away. Right now, we are in the middle of a complicated crisis (COVID-19) but remember any time is the right time to invest if you do it smartly.
Still need a reason to start investing, here are the top 4 reasons why you should think about it seriously :
1. Two magical words - Compound Interest
“Money makes money. And the money that money makes, makes more money” - Ben Franklin
As Ben Franklin stated your money makes money. And then you make more money on the money your money makes.
Now to put it in some number form, let's assume you invest $1,000 in 2020 and it earns a 20% return. That means you make $200 and you’re left with $1,200 in your account.
Now suppose you don’t contribute anything next year still, you will make money. This time instead of $200, you actually earn $240 because you’re getting that 20% on a larger amount. Now, you have $1,440, simply because of the magic of compound interest.
That is the power of compound interest. Without you doing anything, your money keeps on growing more all on its own. The longer your money can benefit from the magic of compound interest, the bigger your profit will be as time goes on.
2. Give the ability to take control of your future
Remember investment isn't a get-rich scheme. It's more about building a financial safety house that will protect you during difficult times in the future. At some point in your life, you are going to have to stop working, so when that day comes you should be ready to support yourself and your family. Investing can help you create that financial freedom, and there’s no better time to start than right now.
3. It's OK to make mistakes
A lot of people avoid investing because they are afraid of messing up. Many people believe that investing is a complicated thing that requires you to spend a ton of time and energy to get things right.
The reality is that for the first few years of your investment journey, the returns you will make don't matter very much. You might lose some on your initial investment but it will not matter much. The main thing that matters is your savings. The more you save, the more money you are likely to have, even if you are losing on some investment. So even if you make some bad investment, you’ll be OK as long as your savings is where it needs to be.
So don’t let the fear of making mistakes keep you from getting started. The most important thing is to get started rather than getting it right on the first go.
4. Starting is not that difficult
There are so many different ways to invest out there, and most of them take very little time to set up. The market is full of easy to use mobile apps like Acorns, and Stash, and online brokerage platforms from Fidelity, Charles Schwab, and many more. They can help in simplifying the process of saving money and automating your investments.
You don’t have to be rich to start investing. There are many easy ways to start without a lot of money and without being a financial expert.
One of the easiest ways to invest and grow your money is through your retirement plan at work. Most employers offer some type of retirement savings plan where you can set aside a portion of your salary and invest it for your future. It also offers some great tax advantages too. All you have to do is get in contact with the human resource department of your office.
Another way to start investing is through a personal retirement savings account, like an Individual Retirement Account (IRA) or Roth IRA. A variety of financial institutions can offer this and are fairly simple to set up online.
You can also explore Index Funds. Index funds are designed to track a stock market index, such as the Dow Jones Industrial Average. Their primary benefit is they provide a low-cost and easy way to invest in the stock market. Warren Buffet also likes to invest in index funds which speaks a lot for itself.
We hope after reading this post, you will be inspired to think more about the idea of investing. Just remember as we said earlier don’t let the fear of making mistakes keep you from getting started. The most important thing is to get started rather than getting it right on the first go.
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