A few years ago I was surfing the internet, probably trying to come up with new ways to make more money. At the time, I wasn’t investing in anything, especially stocks. Everything I knew about owning stocks and playing in the stock market told me I should be scared. It was basically ingrained in my mind that investing in the stock market was a gamble and would likely lose me a ton of money, especially if I was a beginner. Now I wish I hadn’t listened and started investing much sooner.
When the market crashed in 2008 my parents lost a significant amount of their retirement accounts and had no knowledge on how to make the money back. After that, they were set on teaching me that stocks were not the way because some day the market would collapse and I would lose a big part of my life savings like they did.
If only I weren’t so naive, maybe I could have started building wealth earlier in life and even taught my parents not to be scared of stocks. I was naive though and it wasn’t until I started to do some research a few years later that I learned of the potential wealth the stock market offered.
It was almost like destiny the day I came across an article that taught me the benefits of investing in stocks and mutual funds. Up to this point I had been trying everything to generate passive income and Kickstart my net worth with almost zero success. I didn’t even bother learning about dividend stocks, mutual funds and index funds because I was told to stay away.
What a foolish thing to do.
After reading up on the dangers of investing and the benefits, I finally realized that I had been taught everything backwards. For whatever reason, this time it resonated and I decided to at least give investing a try. If I failed it would be a lesson learned, but if I was careful and bought for the long haul, it could turn into an easy way to multiply my savings year after year.
Investing Can Be Scary.
So, there I was unsure of so many things in life, especially concerning money and my financial picture. One thing I was sure of though was if I wanted to start putting the pieces in place for a prosperous future, investing was something I needed to make a serious effort at.
So, I opened a brokerage account.
At that point in my life I was just barely an adult and my full time job left a lot to be desired, for example a retirement or savings plan. With no access to an employee investing plan or 401K, I decided upon an IRA (or individual retirement account) to start building up my savings. It seemed like the easiest way to contribute to my retirement aside from an employer sponsored 401K.
I still wasn’t quite sure how to start investing online though, so I had to do some digging and find out where I could buy stocks from my computer so I didn’t have to hire a traditional broker.
Investing Can Be Confusing.
In the world of investing there are literally hundreds of choices we have to make when getting started. One of the most important choices we have to make is deciding which broker to trust with our hard earned money. All brokerages are not created equal and some just flat out suck. I was lucky enough to stumble on a review that made up my mind for me.
It was so long ago that I’d never find the review I’m talking about, but I can give you a glance at the one I use still to this day. Hopefully it makes your start to investing a little easier than mine was.
Choosing a Broker Isn’t Always Easy.
I had a tough choice to make when it came to choosing a broker. There are so many to choose from and one thing I didn’t wanna do was open an account that I wasn’t happy with and end up moving all of my investments and cash to another one. I wanted an IRA with low fees, plenty of investment options and a reputable customer service.
I chose to go with a brokerage that was fairly unknown at the time called Trade King. It’s still my brokerage and I’ve been lucky to have them handling my investments. It costs just five dollars for a trade, the customer service is great and Trade King even has a mobile app to make sure you don’t miss anything during your busy life at work and taking care of the family.
I’m helping you with the hardest part of getting started with investing, so you won’t have to go through the nuances like I did. Investing is powerful, but sometimes getting started is intimidating. If you’d like more info, click here. There are no account minimums, so you could actually open a retirement account today and fund it when you have the extra money to remove from your budget.
It doesn’t matter how much money you have. You can start investing with 100 dollars if that’s all you can afford. It’s ideal to start investing young, but age is something we can’t change. Whether you are starting at 20 or 45, investing will still be the best path to wealth in your later years.
Start Investing Now Before You Miss Out On More Compound Interest!
Investing Is Intimidating.
Once you have a brokerage account, there are tons of ways to learn more about investing. One of my favorite tools is Morningstar because it focuses on Mutual Funds and ranks/rates them by performance. Mutual and index funds are one of the safest ways to invest in stocks, so you should definitely start doing some homework and finding the best mutual funds that will offer high returns and low risk.
As you’re learning about investing, one term that will come up repeatedly is compound interest. It sounds sophisticated but compound interest is actually pretty simple. When your stocks grow over the years, some will pay dividends, others will just keep appreciating in price. The money you gain from your initial investment will start to earn interest on itself each year, which is called compounding. Its a simple, but very powerful concept and it’s the best way to earn passive income.
Investing Is Powerful.
Albert Einstein once said “Compound Interest is the most powerful force in the universe”, and if he’s not spot on, he’s pretty damn close. Eventually your money can earn much more by way of compound interest each year than you initially started investing with. It was this very concept that got me excited about opening a brokerage account and contributing money each week.
If wealth was what I seeked, it seemed perfectly sensible that investing in the stock market could get me there. I was aware of the risks, but I also knew that if I stuck to a plan and diversified instead of going all in on any given asset, investing could be the key to my future plans. I hate to brag, but I was absolutely right.
Since opening that brokerage account, I have consistently contributed small, but meaningful amounts of money each and every week. The balance has had its ups and downs, but over the last few years the trajectory has been undeniably up. I haven’t lifted a finger to make the interest and my capital continues to go higher whether I contribute or not. Of course I always contribute though. Even if it’s only five dollars on a week when the head gasket went in my Grand Am.
I own mutual funds, index funds and dividend stocks mostly. I don’t “flip” stocks or day trade, but I consistently earn passive income from my investments. It’s money that I won’t spend today, and it is money that will keep growing until I need it for retirement some day. Hopefully I can retire early, long before I’m 65 and Investing is my best bet to accomplish that goal.
I don’t check my account balance often and I never worry that my money will disappear. I’m well aware of the time horizon ahead of me and I don’t feel the need to stress about my investments or watch them every day. I consistently add capital and manage my holdings when I need to, but I don’t do much work to maintain my retirement account.
Investing Is Necessary.
It’s slow and deliberate, but investing is powerful. Guys like Warren Buffett didn’t become billionaires spending their money on useless junk and wasting it at the local bar. The 1% got there because they knew something we didn’t. They knew that investing in the future growth of companies through their stock was the path to wealth. I like to call it piggybacking. As a company grows it’s profits, the stock price goes up and I catch a ride on the assets back.
It’s time the 99% start to join in and even out the wealth gap. I can’t do it for you and I can’t make the decision to start investing for you, but I can give you some motivation to help your hard work and effort pay off. If you’re still scared of investing in stocks, keep reading Building Financial Freedom. I will convince you at some point and I’ll take pride in knowing that I helped you on your path to financial freedom.
Featured Image and other photos via freedigitalphotos.net