Investing and the Importance of Starting Early

money-2180330_640When you are young and the money is hard to come by, it may be that saving for retirement is far from your mind. You might assume that when you finally land your dream job, you will have the ability to make up for that lost money, but in truth, you will actually be spending more only to save less when all is said and done.

It is important to start investing as soon as possible because of a little thing called compounding. Compounding can be described as when the interest you earn from your investments generates even more interest. The sooner you can start this process, the more you will be able to compound and earn.

Let’s take a look at some of the things you might choose to invest in now that we know why you need to be investing right now, regardless of whether or not you think you are old enough to start investing.

Cryptocurrencies

If you aren’t familiar with cryptocurrencies, you are not alone. This is a relatively new economic phenomenon and basically, it is digital money. You can either buy this money outright or mine for it by using a service like Genesis Mining. When you use a service like that, what happens is that each transaction gets recorded in a ledger, called the block chain, and it is also how new cryptocurrency is released. The term mining comes from mining for precious metals and gems and is, in a sense, the same process. When you mine for it, you are investing both money and time.

Cryptocurrencies are valuable due to the fact that there is only a finite amount of them. Transactions are recorded in the blockchain, which keeps track of each piece of the currency from the time it is mined until forever, meaning that for every, say, Bitcoin, you have, you can bet that it has been recorded from when you acquired it all the way back to when it was mined.

Common Stocks

Common stocks are quite appropriately named. These are the most common forms of stocks that investors come into contact with. This type of investing is ideal for individual people. Anyone can buy this type of stock because there aren’t any sort of restrictions on who is allowed or not allowed to purchase it. A common stock is more than simply a piece of paper. It is representative of the bearer owning a part of a company. In other words, it is a piece of an actual business. When you own stock, you are actually a part owner of the business the stock is for.

Shareholders, or people who own the stock, actually own a portion of the assets of that company and a portion of the income stream that is generated by those assets. As the company grows and gets more assets, the income stream can also grow, and the business value will increase. This type of increase drives that values of the stocks in that business up.

Those are just a couple of the things you might invest in, but let’s talk a bit about things you need to stay away from when you are investing.

Not Doing Anything

While there isn’t any sort of guarantee that the stock market will go up when you invest in it, there is one guarantee for sure – not doing anything at all, doing nothing, will not give you the type of comfortable retirement that you want.

Getting a Late Start

Putting your investing career on the back burner is the second worst thing you can do after not making any investments at all. As discussed earlier, the earlier you start investing, the better off your bottom line will be. No matter if you are reading this at the age of 19 or 42, you need to start investing right now.

Short Term Investments

You should only invest in short term investments if you know you will be needing the money from those investments in the short term. What you invest in things like cryptocurrencies and the stock market should be money you won’t need for a minimum of 3 years. If you know that you will need an influx of cash next year because you want to purchase a home or take a cruise, go ahead and use a short-term investment vehicle. Some examples of this would be a CD or a money market fund.

When all is said and done, there are plenty of things for you to invest in. What is critical is that you do it now.

Join our newsletter

Screen_shot_2017-04-24_at_3.52.19_pm

If you like Critical Financial, subscribe and get our latest content via email.

Powered by ConvertKit

Share this post:

Leave a Comment

*