The advice many financial planners will give individuals who are young and starting out is to begin investing, and hold investments for the long term to take advantage of the miracle of compound interest.
Indeed, this piece of advice is one which is heard by many but practiced by few, and the daunting task of managing a portfolio of investments alongside life’s expenses and unexpected hurdles is a difficult, if not impossible, task at times. To get started, many experts suggest trying the following to begin to build a nest egg as soon as possible.
Investing on a regular basis by either portioning off a piece of every paycheck or having a direct deposit set up to transfer funds into a mutual fund, ETF or investing account is one great way to go.
By utilizing a “pay-yourself-first” strategy, putting investing or saving as a top priority (while not falling behind on expenses or credit card payments) is an excellent long-term savings strategy. The cost of retirement is climbing, and having a rainy day fund set aside for one’s post-working days should be a top priority for everyone, but often gets pushed aside in favor of the pressing issues we all have to deal with on a daily basis.
Making the commitment to starting early, even if the amounts do not seem to matter, is an important first step. The value of compound interest is hard to understand at the outset, but will become apparent 20 or 30 years down the road, when the value one receives from dividends or interest is likely to outpace the entire investment amount one is able to put in during the first few years of investing.
Invest wisely, my friends.
