Should You Start Investing?
Contrary to popular belief, you don’t need a million dollars to start investing. There’s no required amount of money for investing and everybody has enough money to do it right now. The most valuable asset in the market is not your money, it’s your time. Some people may prefer putting their money in a saving account instead of investing, although with investing, you are actually growing your money at a higher rate than simply saving it. The secret behind investing is compounding interest.
Compounding interest means that your profit increases each year as your investment grows. For example if you invest $1,000 with an interest rate of 10%, then you’ll have $1,100 at the end of the year. If you continue with that initial $1,000, you’ll receive $1,210 at the end of the second year. Which means you made 10 more dollars compared to the first year. The rate of return for your investment gradually increases over the years, which means for your initial $1,000, you’ll get $2,594 after 10 years. The good thing is, you can even add more money to your investment.
For instance, if you started with $1000 of initial investment with 10% interest rate and added $1,000 to your investment each year, you’ll have $20,125 after 10 years. So the key to investing is to start as early as you can. With more time, you’ll have more compounding interest and your money will grow more.
There are couple of ways to invest your money:
Investing in a company by purchasing shares is probably the most popular way of investing. Anyone can start investing in stock markets. It’s easy to make money investing in stock markets but it’s also possible to lose really quickly. Before jumping straight into the stock market, talk with a financial advisor or learn more about the market to prevent any potential risk. Also remember to be patient with your investment. Trading too much may increase your expenses and causes a lot of stress.
By investing in bonds, you loan your money to a company or government. Investing in a bond is not as risky as investing in stocks may appear. The borrower is required to pay the investor at a specified date. The downside to investing in bonds is that it usually has lower interest rates than stock market due to the moderate risk level.
Investing in real estate is also a great way to grow your wealth. With an adequate understanding of the tax implications, finding the proper locations and with some management skills you can easily invest your money in real estate. You can purchase old houses and sell them for a higher price after fixing them or you can buy a house and rent it to tenants.
Investing in commodity:
One of the less popular ways of investment is to invest in raw material such s gold, iron, silver and more.
So the answer is yes! You should start investing your money no matter your age or circumstances, because time plays a huge role in investment. The earlier you start, the better.