“How many millionaires do you know who have become wealthy by investing in savings accounts? I rest my case.” — Robert G. Allen
Investing is the most powerful action you can take with your money. Investing provides you the opportunity to save smaller amounts of money yet gain tremendous returns over the long haul.
There’s Magic Found In Compound Interest
The power of compound interest allows you to make your dream of becoming financially sound a reality.
If you saved $2,000 every month for 40 years, you would have $960,000.00 saved up (and this is without any interest factored in), but let’s keep it 100: Not everyone has $2,000 to save every month, which is precisely how and why compound interest can make your life easier.
Let’s say you invest $100/month at a 10% interest rate in a mutual fund, and you follow this plan for 40 years. At the end of that 40 years, you will have accumulated an estimated $530,000-$585,000. Not bad for only $100/month.
What if you did have $2,000 to save every month? You will have accumulated $10,000,000-$12,000,000 after those 40 years of investing.
Now, do you understand how invaluable the practice of investing truly is for your financial future?
You can literally evolve into a millionaire by simply saving a certain amount of money and investing it every month or year. If you start saving $200.00 by the age of 25 in an account that offers 10 percent interest, then you will have over a million dollars saved by the age of 65.
Feeling Financially Ignorant And Confused? No Fret.
If you are intimidated by investing and all the financial jargon, get started with robo-investing. Let the algorithms do the investing for you; all you have to do is enter in a few details: your age, income, retirement age, risk tolerance, your regular cadenced automatic payment, and you’re set!
Investing does not have to be complicated. You can invest aggressively or moderately. The more aggressively you invest your money, the more you risk losing money, but the greater your financial rewards will be over the long haul. As your age increases, you can decrease your risk tolerance.
On the other hand, if you invest your money less aggressively, your risk of losing money will be lower, and you will receive smaller financial rewards. However, this approach still rewards, especially over the long haul.
The benefit of investing in mutual funds or ETFs (these provide lower fees usually) is they usually offer a mixture of low-risk and high-risk investments, which means you will get the best of both worlds: security and growth. If you decide to embark upon the investment journey, choosing a mutual fund is a great way to start.
Make The Decision To Start Investing Right Now
If you have not already started investing and want to get started, take a moment right now to sign up for an investment application.
Do your research to determine which application/platform provides you with the right benefits. Many investment applications also do not require significant initial investments.
The best thing you can do for yourself and your financial future is to start saving and investing today — even with as little as $10/month; remember, small amounts over time add up BIG TIME.
Play around with the compound interest calculator and plug in your numbers to see how and what you need to start doing to achieve your financial goals.
If you are already working a full-time job, your employer may offer a 401k matching program — quickly take advantage of this!
Takeaway
Investing is both a critical and powerful tool. You don’t have to have a degree in finance or economics to understand this. You also don’t have to be a financial genius to invest your money. All you need is a computer or cell phone to open up your investment account.
It is salient that you complete your financial research; always approach investing your money with a healthy dose of skepticism and prudence. I recommend reading the most basic of books on investing so you can go about investing the smart and easy way.
The more you know about money, the wiser you will utilize it, which means the better it will treat you, equating to greater rewards.
Definitions
Investing
Expending money with the expectation of gaining a profit from those expended resources.
Stocks
Resources raised by a business or corporation through the issue of shares.
Mutual Funds
Diversified holdings that are professionally managed and funded by shareholders.
Compound Interest
Interest calculated on both accumulated interest and the initial principal = A gift to you.
Compound Interest Calculator
There are many resources and websites that offer compound interest calculators that can show you how much you need to save, at what interest rate, and the amount of time it will take to reach whatever financial goal you desire to achieve.
Go to Google and type in compound interest calculator, and you will see different compound interest calculator options that you can toy around with.
This article is for informational purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any major financial decisions.