In the NewVIEW NewCHALLENGE this week, we’re busting the myths and clearing up the mysteries that surround investing. This is such an important fear to conquer to start making your money work for you and start building your wealth.
The topic of investing can be intimidating. Not only do many people lack the basic financial literacy to feel confident about investing, studies show that younger people, Millenials in particular, don’t trust the stock market and can’t wrap their heads around the concept of saving money and not touching it for years.
But what do we expect? Financial literacy simply isn’t a priority in the public school system. Less than half of states require kids to study economics, with only 17 requiring a personal finance course. Many people don’t even think about investing until later in life because it just isn’t something that’s taught or emphasized to them.
That’s why it’s up to us as parents to educate our children about money management and the importance of investing. (For those of you with daughters, it is especially incumbent on you to empower them to confidently manage their own finances!)
Here’s what I wish I had learned about investing at a young age:
Money is a tool to make more money
Of all the important lessons I’ve learned about investing, one of the most critical is thinking about money not as something I *have* but as a tool I utilize to build wealth. The more you put out there, the more will return to you, and the more you can recirculate into the community.
We have to equip young people with the mentality that money isn’t always something that’s meant to be held on to, but rather a resource that can benefit everyone. It’s a subtle mindset shift that is a game-changer for achieving long-term financial security!
Anyone can be an investor
You don’t have to work on Wall Street to grow your wealth through investments. Anyone – young, old, middle-class, lower-class, women, minorities – can start investing today to improve their financial situation. By working on your financial literacy, you can empower yourself with the knowledge you need to make smart investment decisions.
It’s easier than you think
Not only is there no “club” to enter to start investing, the financial barrier to entry is also much lower these days. In some cases, all it takes is a $50 automatic investment to waive the usual minimum investment requirement for an index fund.
In addition, there are numerous apps and robo-investors that make dipping your toe in investing easy, with podcasts and blog posts that offer free strategy advice. And, after all, once you put a little effort in upfront to create your portfolio, your money practically starts growing while you sleep!
There are risks – but not investing is riskier
When you take inflation into account, socking your cash away under your mattress would be much more harmful in the long run than investing your money and letting it compound. Yes, there are risks; but the stock market is a cycle of ups and downs. As long as you don’t sell when it tanks, history shows yours assets will likely bounce back.
The time to invest is now!
One of the most basic principles about the power of compound interest is the earlier you invest your money, the better. Starting to invest as early as possible allows your money to grow year after year, taking hits when the stock market dips, then rebounding and continuing to compound.
The key to leveraging the power of compounding to grow your wealth and create a legacy is to take advantage of time – that’s why it’s never too early to start investing your money.