I’m curious, have you started investing yet?
Investing for your retirement right now is one of the best financial decisions you can make. If you want to feel financially secure, start investing.
If you haven’t started investing, here’s why it’s important to start.
You should never invest in something you don’t have a basic understanding of, but when it comes to investing the most important thing is to start investing. That sounds too easy to be true, just start investing?! Starting to invest as soon as possible is important because of a finance concept called time value of money.
The time value of money shows that a dollar saved now will be worth more later because of interest earned over time.
Compound interest is when you have money that makes more money and that makes more money. Or in other words it’s when your interest earned, earns interest. It’s quite fascinating, and like a magical unicorn. If you start investing young and regularly over the course of your life you will build wealth.
You just have to do it: invest long-term for retirement.
It’s common that people simply never start investing.
GoBankingRate found that one in three Americans have nothing saved for retirement. CNBC reported the median retirement savings by age group, and it’s clear that even people who are saving aren’t investing enough or investing consistently.
Here’s the median retirement savings by age group:
- 32 – 37: $480
- 38 – 43: $4,200
- 44 – 49: $6,200
- 50 – 55: $8,000
- 56 – 61: $17,000
Why haven’t you started investing?
If you haven’t started investing, try to figure out what’s holding you back. Here are common reasons why people haven’t started investing yet.
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1. You don’t feel educated about investing.
In high school you may have taken Calculus and AP classes, but never had curriculum on how investing works. Even if you went on to get an Engineering degree- they don’t explain the stock market or about retirement accounts. Everyone wants to be smart with their money but understanding investing can be like learning a foreign language.
2. It’s not the “right time” to invest.
First you don’t invest because you feel like you have a meager salary. Then after a few years your salary increases, but then you’ve got crazy high costs for childcare and maintaining a household. You’re bound to have some sort of financial emergency- whether it’s unexpected medical expenses, or a job loss. In a blink of an eye, you can see your entire working life pass by without investing because it never is the “right time.”
3. Investing seems scary and too risky.
Research shows that 20-30 somethings are avoiding the stock market. The stock market can rise and fall in the short run, and the risk seems too great. Nerd Wallet took historical data and ran simulations for a 25-year old saving in a savings account until age 65 versus investing in the stock market.
They showed that avoiding the stock market can be a $3.3 million-dollar mistake.
Don’t let this happen to you- I encourage you to start investing. There’s so much to learn when it comes to investing- it can be overwhelming. You don’t need to know it all about investing, but there are a few things that are important to know about investing.
Before you start investing here are things to know:
- Understand how pension plans work, and why you can’t bank on Social Security to fund your retirement
- How to avoid investing your money at the wrong time- right before a crash
- Learn how to select a portfolio that performs better and earns more interest than a portfolio selected by financial analysts
- Master the tax benefits with investing in certain types of retirement accounts
- Understand and apply investing strategies that will help your investments stay strong, even during recessions
- Get the rule of thumb to find out what percentage of your retirement should be exposed to the stock market
- Find out two investing tips that you won’t find in the Wall Street Journal, but they’re vital
- Learn how much you can withdraw from your nest egg when you retire and be confident that you won’t run out of money
- See the miracle of compound interest and a year-by-year inflation adjusted projection of how your money will grow
If you don’t have time to research investing online and endlessly sort through the internet: don’t let that stop you from investing.
Again, the best decision you can make for your financial future is to start investing PRONTO! I started investing as a teenager with a low salary and not once have I regretted that decision. I’ve spent hours upon hours upon hours researching online, reading best-selling personal finance books, and have a degree in Finance from a top business school. I created Best Money Class Ever, a 4-week class, that outlines investing strategies and mistakes in a simple way so you can start investing confidently, now.
If your income or debt load is preventing you from investing Best Money Class Ever can help you cut your expenses to be able to invest in the first place.
There’s so much to learn about investing. Have you started investing? You don’t have to be the next Warren Buffett, you just have to start.
