When should you start investing? Is the age of 15too early? What about 30 or 50?
Traditionally, investing was a preserve of the old. It wasn’t a big deal if you started saving after. But at the moment, that isn’t the case. If you wait too long, you may end up working past your retirement age which isn’t a nice thing. Whether you are an FDA consultant Toronto or you are the MD of some big institution, you have to start investing early.
If you can start investing before 20, you will be smiling all the way to the bank in your 50s. But, why should you invest before you hit 30?
It gives you a wealth building advantage
By putting your money into a portfolio of stock without using the dividends earned, you will have millions stacked away by the time you retire. Time is crucial in investments, and the longer you keep your money in an asset class, the higher your returns. The best part about long-term investments is that you don’t do any heavy lifting. While you will be scared when the stock market collapses, it somehow rebounces every time. For high returns, you have to reinvest your dividends.
Unfortunately, you cannot make as much if you start investing after 40, especially if you are going to invest the same amount as that invested by someone in their 20s.
With the wealth building advantage it gives you, as well as the fact that it helps you build a solid investment portfolio, how and where should you invest in bigger returns?
You should invest in your future by contributing to your 401k plan or other work retirement plans. Your contribution should be up to the amount of the company match if there is any. Increasing the amount of money saved up in your retirement plan is essential; not just because you will have money to live off after retirement but also because of the tax advantages attributed to the retirement savings. By leveraging the company’s contributions, you earn a sizable return.
Matching your employer’s contribution is also highly recommended because you will have unlimited bankruptcy protection for your assets in case you are swiped out.
A Roth IRA is a good place to put your money if you are looking for a second retirement savings account.
You might want to exploit the Health Savings Account regulations for you to turn the HAS into a third IRA. Though imperfect, it could be an excellent option for some families.
Invest in yourself
One of the best places to invest in is in yourself. You are your most significant investment in terms of your skills, experience, and knowledge. Investment in self is crucial because your earnings will easily dwarf your savings or investments you might have during your career.
You could increase your value through hard work as well as continually upgrading your skills and knowledge. You also need to make smart career choices.
Set short-term goals to help you achieve your long-term goals.
While life goals hold some uncertainties, doing small things now to meet your short-term goals will help you achieve your long-term goals faster.
Some of the other things you could do include:
- Living modestly
- Take calculated risks
- You should also seek inexpensive diversification if you have enough money to spread around. You could also use Index and exchange-traded funds.