We’re all constantly deciding what the highest and best use of our money is. When you look at investing through this lens, everyone is an investor - even if they don’t own a single share of stock. What successful investing looks like is producing the highest return possible for a given level of risk to achieve your goal. To reiterate, investing is how you allocate existing assets and cash flow for a future desired benefit. When Is the Right Time to Start Investing? Related reading: How to start investing as a teenager. In total, it will take you 13 years and nine months to pay off that debt, and it will cost a total of $16,357. You’re then only able to make a 4% monthly minimum payment on the debt. Let’s say you have $10,000 of credit card debt at an 18.9% interest rate. On the other hand, what happens when you let compound interest work against you? Investing $500 a month for 40 years, earning 7% a year (the average rate of return in the stock market), allows you to build a portfolio worth $1,320,562. What investing does is it allows you to take advantage of compound interest. The longer you swim upstream, the harder and faster the current works against you. Not taking advantage of it is like swimming upstream. Better yet, the longer you swim, the easier and faster you’re able to swim. Having compound interest work for you over your lifetime is like swimming downstream. One of the most important financial decisions you’ll make, if not the most important, is whether you allow compound interest to work for or against you. Second, you have to know why you’re investing, and more specifically, the goals you’re trying to accomplish. Plus, you should consider your current cash flow situation, which is the amount of money you’re able to invest going forward based on existing income and expenses. Understanding this definition is important because it touches on how you should think about investing from the fundamental level.įirst, you have to take inventory of your existing assets - mainly the cash you have available to invest. Investing is how you allocate existing assets and cash flow for a future desired benefit. Here’s exactly what we’ll cover in this guide: Better yet, you’ll learn the simple strategy that has consistently beat investing professionals for decades. But by the end of this guide, you’ll see that successful investing is not complicated. This is a complete step-by-step guide on how to start investing.įor beginners, there are many big decisions to make when you’re starting to invest. May earn money when you make a purchase or sign-upĪfter clicking. Some of the links on our website are sponsored, and we
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