Financial advisers often recommend investing as a way to grow your wealth or help you achieve life goals. Millennials appear to be taking this advice to heart as more and more of them start to put their money in the stock market.
Unfortunately, there are still many members of the generation that haven’t started investing yet and they may be making a big mistake by waiting before doing so.
A Business Insider survey of over 2,000 people between the ages of 21 to 38 revealed that 41% of the respondents are not invested in any financial products yet. And that almost half of them believe that they don’t have enough money to do so and that earning more would cause them to start investing.
The sentiment was evident even with people who earned up to $100,000 annually. This is a shame considering that you don’t need a lot of money on hand to invest.
In fact, there are some investment apps that would allow you to build a stock portfolio with as little as $10, to begin with.
The Value of Time
If you can afford to have your basics covered and still have some money to spare, experts advise all young people to invest early.
Starting now can get ahead of your long-term goals whether it’s retiring in your 60s or even earlier. A few years can score you future earnings of tens of thousands of dollars thanks to something called compound interest.
Financial planner Malik S. Lee explains that compound interest starts a money snowball as it applies interest on top of your principal investment and then your new balance. However, he emphasized the importance of time when growing your investments.
While the stock market may experience extreme highs and lows in the short term, it has historically trended upwards in the long run.
Creating a Habit
If you don’t have a large lump sum to invest right now, you can create a habit of investing small amounts in the meantime. The important thing is that you get in as soon as possible.
Consider investing as something like working out. Nobody starts lifting the heaviest weights at the gym on day one but that doesn’t mean you should stop altogether just because you can’t meet your expected benchmarks right away.
Just remember to take on risks you’re comfortable with during the beginning of your investing journey.