If you haven’t started investing, I don’t blame you! It’s not something we’re taught growing up, it’s incredibly intimidating, and we’re scared to make a mistake and lose our hard-earned money. There are entire TV channels, countless articles, and thousands of books dedicated to the topic of investing and to make matters worse, these resources often provide us with the opposite advice. Yikes! What’s a gal to do?
While I completely understand why we put off investing, I urge you to give it a try! Here are my four reasons why you should start investing now:
1. We learn by doing.
How many times have you studied everything you could possibly learn about something only to find that you didn’t really understand it until you gave it a try? Think about your time in college. No matter what you learned about life after college or how many skills you gained to prepare you, nothing compared with the value you received from real world experience. Investing is no different. You can read and research until the cows come home, but until you open a brokerage account, purchase an investment, and experience what it’s like to own something in the market, you won’t fully ‘get’ it.
2. You have enough money to start.
One of the most common reasons I hear that people haven’t started investing is that they don’t have enough money. Maybe that’s why you haven’t started yet. We assume that investing is just for millionaires or for Wall Street bankers, but you don’t need much money at all. Did you know you could invest in all of the largest 500 companies in the U.S. for under $200? Yes, that’s true. You can own a piece of all 500 companies on the S&P 500 for under $200. What are you waiting for?
3. You’ll reach your goals faster.
I assume you’re pretty awesome. You’re most likely up to big things and have some pretty amazing and ambitious goals. Guess what? Investing helps you achieve your long-term goals faster. If you want to achieve financial freedom so that you don’t have to work, can invest in property, travel the world or [insert your biggest goal here], investing your savings will help you get there faster. Not only do you have the potential to earn more on your savings when you invest it, but you also get to invest your earnings year after year, which is called compounding. Warren Buffet calls compound interest the 8th wonder of the world because it allows for the accumulation of wealth. Your money grows and your money growth grows.
4. If you don’t invest, you are leaving hundreds of thousands, if not millions of dollars on the table.
Not only does investing help you reach your goals faster, it also helps you earn thousands, if not millions more over the course of your lifetime. Talk about a raise! Let’s say you save $5,000 this year and expect to be able to save an additional $1,000 each year going forward. That means you will have saved $5,000 this year, $6,000 next year and $7,000 the year after.
For the sake of simplicity, let’s also assume that you plan to use all of these savings for long-term goals. Over 20 years, you will have saved $315,000. If you put that money in a high interest savings account with a return of 1%, you’ll have almost $340,115. Not bad.
But, if you invested that savings in the S&P 500, which has had an average return of around 9.4% over the last 20 years according to Yahoo Finance, you’d have almost $708,000 saved. That is more than double the amount you set aside. Imagine what the difference would be if you saved even more than that!
Long story short, don’t cheat yourself by putting off investing. Getting started is much more important than being perfect and I’m here to help! I promise, it’s not as scary as you might think.
What’s holding you back from investing? What’s one thing you can commit to doing this week that will move you forward in the process? No matter where you are in life or how long you’ve been putting this off, it’s time to get your earn on!
Originally seen on bSmart Guide.