*This blog post is my personal opinion only and may contain affiliate/referral links.
If you are new to investing, you should know that an investing mindset takes time to mature and becomes a habit. Many experienced investors would tell you that it is a process too and that it takes time, patience and skills to become successful with the Stock Market, Cryptoccurrency, Real Estate or whatever investing outlet is your choice.
I always believe investing is an intentional choice and is not something to be forced upon. It is not to be given as an advice especially if you are not financially qualified, but for the sake of personal finance, i like to give some benefits that guided me to go through with my investing journey.
Thinking Long Term
We come at different stages in our investing, and it’s alright, but what i often hear from experienced investor is to start early. You may be at your teens with a part time job, a fresh graduate who had just started a job or even in your 50s and just had a big business breakthrough. It doesn’t matter when you start, as long as you start or catch up in the case of the 50 year olds.
One of the main goals of investing that should be impressed on your head is to have another major source of income at your retirement. I said “major” source of income because you have to have more than enough to afford the life that you envision for you and your family. As early as possible, you should save and build your future with these investments.
Power of Compounding
For visual purpose, one must look at a year to year growth of an index fund to convince a newbie or a doubter the power of compounding. You would see the flutuations of the stock market throughout the years but you must also understand that the market always bounces back.
Why Index funds? As someone still learning his way on the in and out of the stock market, index funds are very passive investing and do not involve the actual choosing of the stocks. You are set already because index funds track the exclusive companies on its particular index list.
Aside from looking at the lessons of stock market historical prices, it would be very convincing to teach a new investor that interest are earned and reinvested at your principal and that exponentially speeds up the growth of your investment. If you consistently set aside money for index funds investing for years, then you have a nice cashflow money waiting for you on your retirement.
Lure of Early Retirement
Do you want to work until your retirement age or retire early? I am guessing many would choose the latter so they can have more time with their family and also with themselves. This appealing idea is something that would most likely motivate a new investor.
Sometimes working hard is not enough, one should also be smart with their spending. After all the basic expenses are accounted for, allocating extra money for investing is the best practice a beginner investor can do. This could be as easy as auto depositing money to a retirement account every payday.
To sum this all up, i thing that if many would understand the concept of long term growth mindset and compound interest, then early retirement is entirely possible.
Thanks for reading.