Investment is the phenomenon where money generates more money, so it is not so hard to understand that the sooner you start investing your money, the more time your money will have to replicate itself.Thus, you should start spending your money as soon as possible and take a resolution of spending your money right now instead of putting your money in compound interest schemes where your money grows very slowly. Rest assured you will never regret your decision of early investments, as it will pay you manifolds. Of course, you can start with a small volume of money and later increase the amount as and when it is possible to say when you receive some bonus or other unexpected profits. Hereunder we will elaborate a few positive points to start investing at the earliest.
- Money will work harder for you;If you select to put your money in a bank account it will grow at a comparably low rate by adding interest in to your principal amount, but on the contrary if you invest your money in stock market it will fetch more returns for you in the same period of time. We can understand this by taking a numerical example. Say you have spare money of $1000 and you put it in a bank account earning 1% interest. Then in 5 years, it will grow a little over $1050, if compound interest will be applied. This may look satisfactory for a short-term goal, but if you are targeting a long-term scheme, your initial amount may earn more profits for you. If we assume a minimum 10% annual returns, which is a conservative assumption, then the same amount will become a little over $1600 after 5 years. That is a clear difference of $550. Even if we estimate our returns at the most conservative growth rate of 6% per annum, you will get an additional $280 in your hands.
But here a risk is also involved because as the stocks usually go up, it may go down as well and sometimes if hard luck is associated it may go down by a considerable amount such as in the bear market. But there is an established history that the stock market will always bounce back and your losses will ultimately recover. Only you will have to wait patiently for a right time, so it is advisable not to invest money which you will need urgently in coming years, such as for buying a home or a car for yourself, or having a child in the near future, or sending your kid to college next year.