When it comes to many things in life, I’ve found it’s best to begin with the end in mind. So I’m going to approach answering the above questions from the last to the first.
The single most precious commodity anyone reading this has is time. Time is the one asset we have of unknown quantity but absolute certain importance. After all, when our time expires, it’s over. Interestingly enough, time is the one resource that many would-be investors overlook as being important. Too often how much money one can make overshadows the much more important question of “how long do I have to make money?”
But more to the point. The reason “why now” with regards to you investing is ridiculously simple: you have more time right now than you will ever have. And you will have even less time tomorrow.
In fact, every unutilized second chips away at the potency of life’s very essence. Many seem to understand and apply the urgency of “now” when it comes to the pursuit of life goals, attaining higher education, or even the opportunity to travel to exciting places around the globe. Yet, far fewer seem to hold their money in such high regard, although money ironically enables many pursuits in ways that other possessions simply cannot.
Some of us may argue that we will have more money to invest in the future. Without besmirching the logic behind such sentiment—starting with the fact that the future is all but uncertain—I’ll just say that, mathematically, time typically counts as the most important priority for an investor.
There was an article making its rounds through the internet a few years ago showing how a 25-year old called “Susan” starts investing a small amount and actually beats another investor—Bill—who waits a decade to start investing. What’s noteworthy that Susan act actually stops investing yet, because of her early commitment of funds, ends up with more money than Bill—the least successful investor in this hypothetical—who waits the longest and commits the most money per year to his investing pursuits.
Of course, the real MVP of the hypothetical is Chris, who invests the same annual amount for 40 years.
But, to be perfectly honest, the answer to why you should start investing it isn’t really about million-dollar projections 40 years down the road. It’s about improving tomorrow and the day immediately thereafter. With just about everything, it’s about making small, substantive improvements one day at a time. The cumulative effort builds, over time, to tangible success down the road. This process is not unlike how we get in shape physically and, more importantly, how we stay that way.
It’s also how compounding works for money invested over time. Small gains group together to become large accumulations over time.
I can’t say it enough: Time is money and then some. Young, active investors are a gift to themselves and, if persistent, to later generations as well. Now if you’re suddenly feeling as if you’re too far behind to begin investing because you’re not 25 anymore, you’ve missed the point. Completely.
The recipe is ridiculously, maybe even deceptively simple:
- Save some money.
- Invest it.
- Learn as you earn.
- Save some more.
And with some success, it’s very likely that you will also find ways to have fun doing so. Inviting a few friends along your investment journey helps more than not.