“Why should I invest in the stock market?”
Simply put, nothing has been a more significant generator of wealth in the last 100 years than the stock market.
$100 invested in the general stock market in 1950 is worth over $50,000 today.
Since the creation of the S&P 500 index in 1957, the index has averaged a 7% annual return. What does 7% annual growth of your money look like?
Consider $10,000 invested today and not adding a penny to it for the next 30 years. By only getting that 7% return compounded year after year….
After 30 years your $10,000 has turned into more than $80,000!
What do these example show? Responsibly allocating your savings to the stock market now means meeting your financial goals for the future.
Bank accounts yield nothing, real estate is expensive, risky and volatile. In order to meet future needs of retirement, education costs, children and grandchildren you have to get higher return on your savings.
At Begin To Invest – We will show you how – But it means starting today.
Time is money – especially when that money is compounding at a rate of 7%. By not investing today, you are losing more than just that initial amount you invest. You lose the ability to let compounding interest work for you.
Consider the following example of someone investing today compared to waiting 10 years to invest:
Person 1 contributes $1,000 a year to his retirement account starting at age 20 until he turns 34, for a total of $15,000 saved. Person 1 does not contribute another dollar to his account. The money grows in a tax-friendly retirement account such as a Roth IRA until he retires at age 65. His investment grows at a rate of 7%, the average return of the S&P 500 index over the last 55 years.
Compare that situation to Person 2, who waits until age 30 to start investing $1,000 a year. Person 2 puts away $1,000 a year into a retirement account for the next 35 years, until he reaches 65 years old. Person 2 has saved a total of $35,000 ($20,000 more than Person 1), and will see that investment grow at the same historical average rate of 7%.
How do these situations play out in the long run?
Person 1 has saved $15,000, and got started 10 years earlier.
While Person 2 saved $35,000, but got started 10 years later.
At age 65:
Person 1 will have $225,681.
Compared to Person 2, who will have only $158,590.
Even though Person 1 saved $20,000 less, they will end up with $67,090 more!
Person 1 will have $67,090 more to spend on traveling, a house, a car, etc., later in life because of the sacrifice early to save $1,000 a year (less than $100 a month!) early on in their life. 10 years makes all the difference!
By beginning to invest now, your investments begin to grow sooner, and get to grow longer. This is compounding interest at work!
Ready to start saving and begin investing? Begin To Invest will show you the way.
We have guides on creating and following a budget, smart savings plans and comprehensive investment research that will get you back on track for your future financial goals.
For a new investor, the options on where to invest your money seem overwhelming. There are thousands of individual stocks, thousands more mutual funds, and yet thousands more ETFs (exchange traded funds). There are foreign stocks, foreign bonds and foreign funds, there are stock options, futures, commodities, currencies…How the heck does one decide where to start?
Our “Getting Started Series”is broken up into 3 other parts:
- Part 2 talks about all the investment accounts out there, and finding which is best for you. You have heard of 401ks, IRAs and Roth IRAs – But what’s the difference? In Part 2 you will find out which type of brokerage account is best for you.
- Part 3 talks about the basics you need to know before investing. What are stocks? What are Bonds? Or are ETFs and Mutual Funds for you? Part 3 also reviews some of the largest and most popular brokers out there today, so you know where to go to start investing.
- Part 4 finished the series off with discussing Asset Allocation, or how you split up your money between stocks, bonds and other investments.
Begin To Invest offers loads of resources for the beginning investor. To start, you can sign up for our mailing list at the bottom of this post which sends out weekly investing advice and now includes our eBook “Begin Investing – A Guide to Get Started” for FREE!
Our homepage, BeginToInvest.com is updated constantly with new articles, tips and tricks to help your savings grow. A new investor will never be without help here.
The series continues with Part 2, found here. In it, we discuss a few actions you need to do before you buy your first investment. Foremost, you need to open up an investment account. Have you heard of an IRA or ROTH IRA? How do these accounts differ from regular brokerage accounts, or 401ks? The decision on what type of account you open up could save you thousands!
What are you waiting for? Time – and money – are wasting. Begin To Invest now!