When Should I Invest?

The earlier that you start to invest, the better off you will be in the future. The sooner you learn to invest, the sooner your money will be working for you instead of you working for your money. In a perfect world, your parents would teach you how to invest at a very young age, and by the time you were an adult, you would already have a good amount of money invested. You would have the knowledge to keep growing your investment, and you would be very wealthy and able to retire at age 40. Of course most of the time it doesn't happen like that, mainly because most parents and most people have no knowledge of investing at all because investing and money matters are not taught in school.

Investing a set amount of money consistently over time is the best way to invest because of something called compound interest. Basically compound interest means you gain interest on your original investment, plus you gain interest on the interest that you gain every year. For example, let's say you invested $100 into a mutual fund. The fund returns a 20% profit in year one, so you now have $120 invested. In year two, the fund returns 20% profit again. Instead of earning 20% of your initial investment, you earn it on $120. So now you have $144, which is an additional $4 because of compound interest. It doesn't seem like a lot of money, but in twenty years, if you just earned 20% per year on your initial investment, you would have $500. With compound interest, you would have $3,833.76.

Compound interest is one reason why you should invest as soon as possible. Using the above example, if two people invested $100, but one invested 10 years after the other, the late investor would have $619.17 compared to the early investor who has $3,833.76. Even so, it is still never too late to start investing. This is because with other methods of investing, you can profit in shorter periods of time. Like with real estate, day trading, buying low and selling high with stocks, and with many other ways. Though it will take a bit more effort and knowledge if you're starting later in life. A good resource that I found that teaches short-term investing is called Short-Term Investing. So choose your the method of investing that you're most interested in and get started today.