Investing is one of those things that many of us feel we’ll get around to, perhaps when you have “enough” money or time. When it comes to investing, though, waiting really isn’t the better option. In fact, the best time to start investing (other than yesterday) is now.
More Time = Bigger Nest Egg
One of the reasons that investing now can be so beneficial is due to the power of compound interest. When you invest, your money generates a return. The size of the return varies, depending on market conditions, the assets you choose, and other factors, but there is usually a return.
The return is often expressed in annualized terms, and as a percentage. A good example is the S&P 500. From 1926 to 2009, the annualized return of the S&P 500 was 9.81%. Some years, the S&P returned more than that, and some years it returned less. In some years, it even lost value. However, over time, the returns tend to even out.
If you aren’t investing now, you are missing out on years of returns. Plus, because compound interest is money earned on your earnings (so your money grows even faster), the longer you invest, the more your nest egg grows. Investing now, rather than 10 years from now, gives your money more time to earn — and can mean thousands of extra dollars in your nest egg.
You Don’t Need a Lot of Money to Start
Even better is the fact that you don’t need a lot of money to get started. Most online brokers will allow you to open an account with a small amount of money. If you set up an automatic investing plan, you can also purchase partial shares of an index fund or certain stocks.
Investing in a fund is usually a good choice for beginners without a lot of capital since it provides instant diversity, and you usually don’t need very much money to make it work. This also has the advantage of not requiring a lot of time to manage. A broad-based index fund doesn’t require a lot of tinkering on your part; all you have to do is invest a set amount each month.
Don’t lose out on the wealth-building opportunities associated with investing. Start now, even if you don’t have a lot to invest. Over time, it will really add up. You don’t want to look back and wish that you had started sooner.