The first question many people ask is why do people need to invest? The simple answer to this daunting question is to create wealth for your self in the future, whether it is for retirement, education, or just for fun. Investing will help you achieve your financial goals not only in the long term but also in the short term as well.
If you invest $3000 in the stock market today and your money returned roughly 11% a year (S&P average), that $3000 will be worth $68,676.89 in just thirty years. That seems to be a lot of money coming only from $3000 and the truth it is but you could even get more. The S&P is a fairly safe index and the returns are nothing special. It proves to have an upward trend in the long run but there are many more funds out there that could bring you in a greater average yearly return than the S&P.
You may be saying, “Well what if I don't have that kind of money right now?” There is a clear answer to this. Most people that start off young aren't capable of stashing away three grand this early in his/her life but there are always ways to save money. Think about things you do during the day that you could stop doing and save a few dollars here and there. Do you go out to eat multiple times throughout the week? To you buy snacks from the snack machine at a certain time of the day? Do you buy the name brand products when off brands are just as effective? If you could change one habit in your life that would save you $3 a day and you save that $3 for 365 days that would equal to $1095, which is no small penny.
If you thought you couldn't find money to invest in the stock market think again. I just revealed to you an easy way to save money and if you stay with it you could save over $1000 in a year. If you were to invest $1000 a year for 20 years in a conservative S&P Index fund by the end of the 20 years you would have accumulated $199,020.88. See what a bit of saving combined with investing can do?
The earlier you start saving and the earlier you start investing the better outcome you will see. It is all about time and compounding interest. Stay informed with my next articles about the value of time valued money and compounding interest. They will sure to come soon.
Save now. Invest now. Be fruitful later.
