The Benefits of Early Investing vs. More Investing
Everyone thinks you need a lot of money to be a successful investor.
That fear keeps some potential investors on the sidelines.
Many people think investment is only for rich people or people with a lot of savings or financial knowledge. In fact, not money is one of the biggest advantages an investor can have:Time.
You are far better off if you start investing early rather than if you start investing years later, even if you are investing larger amounts.
That’s why they say investing is a marathon, not a race.
What is Investment?
To invest is to put your money in something that will make you a profit.
It’s a way to get your money to work for you, instead of just sitting there.
Typical investment options are:
- Equities
- Fixed Income/Bonds
- Investment funds
- Exchange Traded Funds (ETFs)
- Estate
- Retirement benefits
All investments have some risk, but they generally have the same goal.
Why Investing Matters
Saving is a good thing, but saving alone might not be enough to keep pace with rising costs.
Inflation erodes your purchasing power over time, meaning you might not be able to buy as much with the same amount of money in the future.
In many instances, investing can help you grow your money more quickly than a standard savings account.
Investing helps achieve such goals as:
- Planning for retirement
- Buying a house
- Education funding
- Long-term wealth-building
- Economic Freedom
The Early Bird Catches the Worm
Let us say that there are two friends who want to invest.
It begins at age 25.
The other is waiting thirty five.
The second investor might be able to put in more money later on, but the first investor has one thing in his favor:Time.
The more you invest, the more time it has to grow.
Returns breed more returns. This can generate a virtuous cycle of growth that gets more powerful with each passing year.
That’s why so many experienced investors care less about timing the market and care more about time in the market.
Why You Should Invest Early
Time is Money
The sooner you begin investing, the more time you have to let your wealth compound.
Even modest gifts can add up over time, over years and decades.
Small Donations, Big Impact
Many people don’t invest because they think they need a lot of money.
Probably regular investing is more important than big investing once in a while.
It’s good to invest regularly and make money over time.
Freedom is More
The sooner you get started, the more chance you will have to make changes to your financial plans as circumstances change.
Later investors will be forced to invest more to reach the same targets.
Improved Financial Management
Consistent investing can help to foster:
- Systematic savings
- Long-term thinking
- Setting goals
- Greater fiscal discipline
These habits also tend to improve other areas of your personal finances.
How to Begin Investing
Getting started doesn’t have to be hard.
Step 1: Set Your Financial Goals
If you know the “why” behind your investing, your decisions will be better.
Possible objectives:
- Retirement
- Home Ownership
- School Financing
- Accumulating wealth
Clear goals provide direction.
Step 2: Save for Your Emergency Fund First
Some financial planners suggest you save up emergency funds before you start investing.
This can help you avoid selling investments when you need to get to the cash.
Step 3: Understand Basic Investment Concepts
Investors knowledgeable about risk, diversification and long-term investing can make informed investing decisions.
Knowledge is usually the great confidence builder.
Step 4: Start with Small Things
Many of the investment platforms allow investors to get started with rather small amounts of money.
“The point is to get going.
Sometimes waiting for the “right time” takes longer than just going for it.
Step 5: Stay Consistent
The rule is that successful investing is all about consistency and not the odd big purchase.
You give on a regular basis that add up over time.
Investment Mistakes
Many investors, especially beginners, make mistakes.
Examples include:
- Took too long to start
- Require cash quickly
- Failing to research before investing
- Decision making, emotional
- Diversity disregarded
- Active trading
Avoid these mistakes for better long term results.
Investment and Risk
There is always a degree of risk involved in investing.
Markets go up. Markets go down.
The economic picture is shifting.
Investing has always got short-term volatility.
Investors with a long-term view and an understanding of risk can weather uncertain times.
Investing for the Future
Technology has made investing easier than it ever was.
Today investors have the opportunity to:
- Creating online accounts
- Mobile applications for tracking portfolio
- Access to school materials
- Reduced investment
- Automation of Giving
These tools have democratized investment for a much bigger audience.
Final Words
Most think that to be a successful investor, you need to have a lot of money. And one of the best things about investing is just getting started early.
Time helps investments grow, habits to form and financial goals to come closer. Over time, even small contributions can accumulate to something significant.
Investing is not a get rich quick scheme. “It’s about being smart, following the plan and letting your money work for your future goals.”
The earlier the journey starts, the more opportunities to grow on the way.
