Investing your money is a great idea! However, when many people think about investing, the stock market and brokers, they can get overwhelmed fast. Some people may think it isn’t worth the hassle to learn about investing. If you are thinking about investing a little of your money, here are the answers to two commonly asked questions you may have before getting started.
Many people simply want to know why they should even start investing. Wouldn’t it just be safer to put the money away in a savings account so you know you won’t lose it? Well, that could very likely be the case, but there are ways to make investing profitable and fun.
Investing your money is a great way to build up wealth over time. The stock market’s daily ups and downs may seem a little frightening to those who are risk-averse, but you have to look at the big picture. With most stocks you will gain money over time. Historically, on average there is a return of more than 9% yearly.*
Investing money can also help you reach your financial goals faster. Many people use their stocks for retirement, college tuition or just to build up a nest egg for the future. You can use them for whatever you want, but if you have a growing investment your goal will likely be met sooner than with a plain savings account.
Another common question people ask before getting started on their investment journey is, “How much should I invest?” Well, that is totally up to you. You can invest as much or as little as you feel is needed, however experts recommend that you invest at least 10% of your income. This includes any money that is taken out if you have a 401K with your job.
You may be thinking that you don’t have 10% of your income to spare. If that’s the case, then start with what you can spare. Make putting money towards your investments a habit. You can even automate your payments to your funds with each paycheck if you want. That way, you never even see the money–it just goes straight into your investment. If you regularly make it a habit to invest, you will always be making your future a priority. Small consistent contributions over time can turn into large investment amounts. You don’t have to do it all at once.
The whole investing game involves a learning curve, so it is important to take the time to research everything before you just dive on in. However, when you learn the basics you will be amazed at how you can put your money to work for you through investing.
*Statistics and info from www.fool.com.