Why Invest?
Do you have some money socked away, or are you planning to sock some money away for the purpose of investing? Are you wondering why investing would be a smart idea and how you can best benefit from the act of investing? Simply put, you are going to want to invest so that you can create and build wealth. Investing tends to be relatively painless in nature, and there are numerous rewards to speak of. When you invest in the stock market, you will have much more money on hand for things like education, recreation and retirement. Whether you are starting from scratch with your savings or if you have some money lying around for a rainy day, the following investing basics will help you understand the journey ahead toward financial well being.
First and foremost, you should know what you are saving for so that you can set your saving and investing goals accordingly. Are you saving up for the purpose of retirement, so you can send your children or grandchildren to school or for a brand new car? Let us say that you begin with $2,000, and you put it all in the stock market. If you get a 10% return, which is the historical average for the S&P 500, then your two grand investment will be worth a grand total of $34,898.80 after a period of thirty years. This may not buy you a retirement home but it will certainly serve as a sizable down payment.
Even if you do not have $2,000 burning a hole in your pocket, you can still invest effectively. Can you afford to invest just your lunch money? Sock away $4 per day for 250 days and brown bag your lunch instead. If you are in your early 20′s, then you have the best ally on your side investing, which is time. After 46 years, which is right around when you will be retiring, you will have more than $1 million dollars, which is a nice nest egg if you really think about it. You can’t spend all this in a year or a couple of years, so keep investing and watch your nest egg grow even further.
As you become older and increasingly financially stable you can put more and more money away. Upping the ante just a bit to $166 a month will allow you to hit the million dollar mark in 39 years rather than 46 years, proving that the money does really add up. This is something that you really need to be thinking about when it comes to your financial stability. The more that you are able to put away into safe investments now, the more you will benefit in the future when your nest egg has grown considerably. Good luck with your financial decisions and investments in the future.
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