Everyone always makes excuses for why they can’t save money each month. I know, I’ve been there. I used to spend like crazy. I took out a credit card and used it for a snowboarding trip. That’s a few hundred dollars that I didn’t have to spend. So I spent next month’s money. When you are using your credit card like that, your making time work against you. Instead time should be working for you. If you want some more information on how bad debt can be, please visit one of my earlier posts over it.
1. You need to start saving today for the future, and even saving a tiny amount such as $1.66 each day could lead to $173,000 in only twenty years. Could you imagine having $173,000 in your bank for just not buying one soda a day? If you just drank water while eating out once a day, you could have over 1/6 of a million dollars!
2. Have money work for you. Time is your greatest asset, and even starting with a small amount today, could grow to a huge amount in the future. If you just invested $10,000 today and didn’t touch it once, it could grow almost 5 times that in just 20 years. And that’s just at an interest rate of 8%! There are funds out there that perform at 12% per year. This would grow to over $100,000 in the same amount of time, just for “parking” your money in a savings account.
3. It’s easy to start. There are many sites out there that will allow you to create an account for free! All they charge is a transaction fee for buying the shares. I’ve been investing in American Funds for years, and I absolutely love it. But don’t think you have to start there. Vanguard.com is another great site to buy mutual funds. I’ve recommended ShareBuilder a lot because the transactions costs are very low (~$4).
4. By not starting today, you’re losing out on potential interest you can be earning. For every day you wait to start investing, you lose potential interest. You’re paying an opportunity cost by not investing as soon as possible.
Image from: churchextension.org
Graduated from Texas Tech University in 2011 with a Bachelor's in Economics and Business Administration. I've been writing personal finance articles since 2010. I currently invest in stocks, bonds, real estate, and several business models.
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27 Responses to 4 Reasons Why You Should Start Investing Today
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What are some vital numbers, figures, ratios, etc. should I be looking at before investing in a company? Also, are there some additional calculations I should be making on top of the “analyst estimates” given in Yahoo! finance?
I would really look at P/E ratios before investing. If P/E ratios are below 15, you should expect them to rise. Right now the S&P 500 is at around a 13 P/E ratio. And you can always expect prices to rise in that situation (almost never do earnings fall to increase P/E ratios). So investing now is a great idea, but look at individual stocks and find out how much you would be paying for one year’s earnings. Also do some research and look at charts, the past is a pretty good indicator on the future. If a stock was trading at $50 a year ago, and it’s now at $40, then read the news on them. If nothing significant has happened, and they’re still recovering, you could expect prices to go up. I’m not sure if I answered everything you wanted to know, so let me know!
Also, you should really consider buying shares into a few different companies. By diversifying your portfolio, you’re minimizing your risk. The stock market as a whole gains around 8% per year, so even if one of your stocks does bad, the others ones should have bigger gains, equaling a higher net gain.
I am new in online Stock trading world. So I have lot of questions to ask. I really have no idea how these things work, but I want to learn it for investment.
Well a good question to start with, do you want to be trading stocks on a daily basis, or are your wanting to invest for the long term? Or both?
Can you let me know what kind of literature I should read for short periods trading? Or maybe short and long periods are the same tactics or literature?
I’m actually in the process to writing a guide on day trading, but in the mean time, you should check out http://www.guidetodaytrading.com/ . They have lots of information on day trading. Normally I would suggest looking at a company’s past charts and finding trends, and then looking at their financials to get a better estimated guess on what the future price will be. But day trading is more of just “do you think the stock price will rise enough today to make a profit?” And I don’t believe day trading and long term investing are the same tactics. You’re more susceptible to losses by investing in the short run, because the stock market can be very volatile (especially with oil prices causing uncertainty), so I mainly look at long term investments and building assets over time. But take a look at that site and let me know if you have any questions, I’ll try to post a simplified guide on this site later on as well.
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