YOU SHOULD START INVESTING NOW HERE IS WHY?

There is almost no way your future self will regret making the decision to invest. 

How and where to start with? 

You probably have heard that if you had invested in tesla or amazon ten years ago it would be worth so much now. How is it possible? 

How do you buy a stock? 

                                           Photo by Austin Distel on Unsplash

Let’s first understand why should you invest. You may have heard about inflation. Inflation measures how much more expensive a set of goods and services have become over a certain period. That means your money is losing its value over time. Many people switch to savings account to earn interest that usually is 0.1% annually so that they overcome the Inflation that actually varies from 2% -2.5% annually. There is a lot of difference. You’re still losing money. Most of the people who deposit the money in the bank to earn interest don’t want to take a risk. 

But there are people who put their money in the stock market with proper knowledge and experience. They diversify their investments at minimal risk.  

In order to beat inflation, we invest in different stocks. An investment is something that puts money in your pocket. Suppose you’ve a house and you charge rent to the people living in your house. You’ll earn a monthly income that comes from rent and second, it’s value will grow over a period of time that is called capital gains. Basically, an asset increases in value over time. But the real estate requires too much effort in managing the asset. That is why we invest in share market. Buy different stocks and let them grow. 

What is a share. It’s a part of the company that you own and because you are a part of the company now, company will pay you dividends. A dividend is a sum of money paid regularly by a company to its shareholders out of its profits. 

Now it’s time to buy shares. You can buy a share of a company through an online broker. There are several online brokers in every country. You just have to google online brokers and read the reviews and find the one with least charges but best services. Buying share is not easy. You must research about the company thoroughly. Since analyzing a company and thinking should I invest in this company or not is a hectic process. It’s better to invest in index funds. Index funds are investment funds that follow a benchmark index, such as the S&P 500 or the Nasdaq 100. When you put money in an index fund, that cash is then used to invest in all the companies that make up the particular index, which gives you a more diverse portfolio than if you were buying individual stocks. These funds are managed by professionals who charge a fee of 1%-2% which is fair as your investments are growing because of their knowledge and experience. Famous author warren buffet says if you gave him a ten thousand pounds and asked him to invest it right now, he would just invest in an index fund. 

With higher returns the amount of risk is high. Investing is a long-term process. Every graph in the stock market is full of variations. When a beginner invests, he checks his portfolio frequently and because the graph fluctuates up and down, he panics and sells his share at loss. Do not panic sell when the market crashes. 

You can start as early as possible. The sooner the better. It doesn’t matter how old or young you are.

 

                                                        Photo by Markus Winkler on Unsplash

Before starting to invest make sure: 

 1.Your debt is paid off. 

2.You have an emergency fund (3-6 months). 

3.You don’t invest the money that you need to use in near future as the stock market is unpredictable. 

Investing is a discipline. Start with whatever you have maybe you’re a student or you work full time. The Sooner you start investing, sooner you’ll build the habit of investing that will in turn build the wealth for your future. Time plays the most important role in investing; your money will grow exponentially with the power of compounding. Get on with it find an online broker and complete your account opening process. Explore the world of share market.