4 Reasons to Start Investing Now

by Miranda Marquit · 0 comments

Many people worry about investing. It seems like it’s too complicated to get started. However, investing is one of the best ways to build wealth over time. If you’ve been hesitating about investing, here are 4 reasons to get started as soon as possible:

1. Compound Interest Works for You

One of the best reasons to get started as soon as you can is due to compound interest. Compound interest is earnings on your earnings. It’s the way money works on your behalf to grow over time. The longer compound interest has to grow, the bigger your nest egg will be. Time and consistency are key for a long-term investing strategy.

2. You Can Start with a Small Amount

Today, it’s easier than ever to start investing, even when you don’t have a lot of money. Many online brokers have low minimums — or no minimums at all. Brokers like TradeKing have low fees, and you can use new brokers like Robinhood and Acorns to invest small amounts affordably. There are plenty of other brokers that can help you get started with a variety of low-cost options and with low minimums that make investing affordable.

3. Index Funds and ETFs Make Investing Easier

One of the reasons that many people struggle with investing is due to the choices they have. They are worried about how to choose individual stocks, and concerned about getting it “wrong.” In the last few decades, however, things have changed. The rise of index funds has made it easier for people to make better choices about investing, and get started without stock picking.

An index fund is a collection of securities with similar characteristics. One of the easiest ways to get started is to choose an all-market index fund — on that basically includes every publicly traded company in the United States. There are also funds that focus on specific indexes, like the S&P 500 or funds that focus on dividend stocks. You can also trade index ETFs like stocks, and reap the benefits of ease and low-cost trading.

Starting with indexing can be a good way to just start building your portfolio, without the need for a lot of expertise. Plus, it reduces the risk somewhat because you aren’t relying on just one security.

4. You Might Already be Investing

Are investing without realizing it? If you have been contributing to your company’s retirement plan, you are already investing. What you put into your plan goes into investments — usually index funds — that help you accumulate wealth over time. On top of that, using a qualified retirement plan comes with tax advantages. Tax-advantaged investing puts your money to more efficient use, and you end up with better results over time.

Check to see what you’re already investing in at work. If you don’t have a plan through work, consider opening an IRA through a low-cost broker. As your financial situation improves, make sure that you increase the amount that you invest. If you can get in the habit of adding to your portfolio over time, your results will be much better.

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