Investing in the stock market may seem intimidating to the inexperienced. However, historically the stock market and real estate have been two of the best ways to create more wealth. And who doesn’t want that? Many are under the impression that if you are on a tight budget, investing in stocks isn’t an option for you. Yet, there are ways you can contribute what you can afford over time in order to have your money make money. Here are some reasons why should start investing now.
Investing is Easier than Ever
With the number of apps out there, you can easily open an account and start investing in minutes right on your phone. From the comfort of your home, you can buy and sell stocks with ease. Even if you feel like you are too inexperienced to start investing, many of these digital investing platforms provide you with educational tools as well. These investment apps are making accessibility to investments and trading easier than ever!
Grow Your Money
It’s a no-brainer, really. You invest in stocks in order to grow your money. But how does investing in the stock market accomplish that? Investment vehicles like stocks are designed to make you money. If you think about it, many big firms own stock in themselves, therefore, it is in the best interest of all that the stock market grows over time. In addition, as the economy grows, the value of your stocks will grow.
Inflation can hinder wealth growth. If you are just saving money in a traditional savings account, the chances that the growth of your money will keep pace with inflation are pretty slim. By putting some of that money into the stock market, while not a guarantee, you can likely invest in a way that your stock investment returns will surpass the rate of inflation.
Save for Retirement
Using an individual retirement account (IRA) or 401k is a good way to save for retirement. The main difference between these two types of accounts is a 401k is employer-based and an IRA is an individual plan. If your employer offers a 401k, the contributions to your account are usually made through deductions in your paycheck. While employers are not required to match contributions, many do. On the other hand, an IRA can be set up on your own. Both of these types of accounts come with valuable tax benefits.
Even if you think you are too young or you don’t have enough money yet to invest, you can still take advantage of compound interest. By investing in the stock market and doing it early, you can watch your money grow as interest is calculated on the interest you have earned as well as the principle amount you have already invested.
While investing in the stock market has its risks, it can be a smart way to grow your savings and meet financial goals as long as you invest wisely. Just be sure you educate yourself and try to invest in a financially responsible way.