Why it is Wise to Invest in the Stock Market at Any Age
Are you going to invest in rapidly growing Canadian growth stocks, or blue-chip Canadian dividend stocks? The decision is ultimately up to you and the consequences of both investment styles are quite evident. A lack of growth on the dividend side, and a loss of capital on the growth. Your age may have a crucial factor in this decision.
Investing your money is the fastest and most reliable way to grow your net worth. If you spend in the stock-market, over time, you will find that you have more money to pay for school, vacation, and eventually retirement. Learning how to invest in stock market options gives you an excellent platform of knowledge for your financial future.
Start By Outlining Your Goals
Identify what exactly it is that you are saving for. A clear goal will help determine how you invest in the stock-market. Are you saving up for a massive purchase? Perhaps electronics, or a time-share rental? Are you planning for retirement, or setting money aside to pay for your child’s college tuition? The decision to invest in the stock market should only be reached if your savings goal is long term. The S&P 500 stock markets value suggests that on average, a diversified stock markets portfolio will give a 10% annual return on investment. To give you an idea of the earning potential, a 10% APY would turn $2,000 into almost $35,000 over the course of thirty years.
Try to Invest in the Stock Market at a Young Age
The best tool anyone has in financial investment is time. Patience comes in as a close second. Don’t be discouraged by a shortage of capital while you are young. The beauty of compounding interest is that small investments now will grow exponentially. The average person can save $4/day by packing a lunch from home rather than purchasing a meal at work or in a cafe. Making this decision 250 days/year gives you $1000 to invest annually. At the same 10% estimated return, this investment plan will turn anyone into a millionaire in 46 years. If you start when you’re 20, this opens the door for your financial freedom in retirement, regardless of how social security and government retirement support work out.
Traps to Avoid
The worst thing you can do with your money is let it sit by idly. So many individuals fail to invest in the stock market, and they never utilize this great system for improving their financial standing. We cannot guarantee that a stock market portfolio will yield the retirement you’ve always been dreaming of; however, in today’s economy, we can ensure that doing nothing with your money will leave you scrambling to make ends meet on social security income in your later years.
As necessary as it is to start investing at a young age, you should address your outstanding financial responsibilities first. This includes student loans, credit card debt, and car loans. Most of these mortgages have incredibly high-interest rates that even the best investment cannot counteract. If you just look at the numbers, it is to your advantage to pay down all your credit card debt before you invest in the stock market.
No matter what you do, don’t turn down free money. If your employer has any matching program, deposit the maximum amount into your retirement account every year to take advantage of their matching before you even dream of expanding your stock market holdings.