When should you start investing?


If you haven’t invested before and are reading this article, the time to start investing is now. That’s the bottom line. In fact, the best time to start investing was last year. Better yet: five years ago! But in all honesty, the best time to invest is as early as you can. Whether you’re 20, 30, or even 40 or older, you can and should still try to invest.
And chances are you’ve probably already invested at some point in your life. You don’t always have to invest money. You can invest your time and your energy. For example, going for a run is a way to invest your energy and time. For the purposes of this article, I’m going to demonstrate how you can invest your money so that down the road you can invest your time and energy into doing the things you love.

Why should I start investing?

Most people invest their money in the hopes that when they need that money again, they will have more of it. While you can always save your money for another day, when that day comes, you will have exactly the same amount you put in (even less when you factor in inflation) [I added this because I think its kind of quippy and people forget about this factor but feel free to delete]. When you invest your money for another day, when that day comes, you will hopefully have more than what you put in. People usually invest for the purpose of achieving some goal. Whether that goal is to purchase a house, a vacation, or just retirement, having your money grow is the best way to achieve your goals faster.

What can I expect when I start investing?

Generally, you can expect your money to grow! But that all depends on your investment. Some investments are risky, but you can expect a higher amount of growth. Some are less risky, but you can expect a lower amount of growth. The choice really depends on several factors, such as your time horizon, willingness to bear risk, ability to bear risk, and your debt levels, among other things. We recommend you speak to a financial professional to help you choose the right investment for you. There is no one-size-fits all approach to investing, because everybody has their own unique circumstances.

What could happen if you invested 10,000?

I mentioned before that the best time to invest is as early as possible. It’s true. Let’s imagine that there are three people who wish to retire at 65. Their ages are 20, 30, and 40. Each of them have at least 25 years until retirement, so let’s assume they all buy the same risky investment. In the United States, the average yearly stock market return since 1993 is about 7.8%. The chart below shows you what happens if each individual invested $10,000 at their respective ages.

basic investing results compounded investment growth

The Results of Investing

The results are fairly dramatic. (I wasn’t lying when I said you should start investing ASAP!) Now, this is obviously an over simplification of the real world. I made a few assumptions that may not be consistent of reality”] in reality, such as the rate of investment growth, retirement age, and assuming that these 3 people are holding the same investment. But the general idea is consistent. Let’s try another experiment. How much growth per year, does the 30-year-old need to obtain to have in retirement what the 20-year-old would have? What about 40?

investing results based on different age groups

Risker types of Investing

To get to the same amount at retirement as the 20-year-old, the 30- and 40-year-old must obtain a higher amount of growth. The 30-year-old must have a growth rate of 10.1% per year, and it must be 14.4% per year for the 40-year-old. Since the average stock market return for the U.S. is 7.8% per year, obtaining higher amounts is very difficult. The U.S. stock market has exceeded 10.1% about 50% of the time since 1993, and has exceeded 14.5% about 42% of the time.

Achieving a return greater than the average of the stock market will require one to take on more risk, which can be undesirable for some. Growth rates are not going to be as smooth as you see in the chart; the ride is typically more bumpy, so let’s make our above example more realistic. Again, assume the 20-year-old is earning 7.8% growth per year and taking an average amount of risk in doing so. The 30 and 40 year old both need to take higher amounts of risk to achieve their growth goal. Below is one possible representation of this.

investing your money in risky investments

This demonstrates how difficult it is to increase your investment growth in the face of risk. You can see that the ride isn’t smooth for anyone. The main point is that you’ll likely end up losing if you end up taking too much risk. The 40-year-old is taking 62% more risk than the 20-year-old to obtain 14.5% per year return. It’s possible that the 40-year-old could have ended up with more wealth had they waited long enough, but with a short 25 year horizon, the risk is just too much.

You should always speak to a financial professional to determine the appropriate amount of risk in your investments.  

There is still hope!

For those who are have missed the boat in your 20s to start investing, there is hope! You can still growth your wealth with a small amount of money. Even by starting with $100, and contributing $5 every month at 30, you can end up with over $11,000 by retirement, as long as you achieve 7.8% on average per year. Adding more to this amount per month will grow your money even more over time.

investing with monthly contributions


Of course, increasing or gradually increasing this can make you better off in the long run and help you achieve your goals faster. It’s actually easier than ever to get started investing. Wealthsimple is a great platform in Canada that I’ve been using since they launched. You can buy stocks and ETFs [def back link this to an article about ETFs because I think less people understand them than we think – people look at me like I have 5 heads when I use this acronym] listed on their platform for free. They’ve even made it very easy to fund your account. You can actually sign up for free and they will give you two free stocks to fund your investment. It’s a really great way to start your investment journey and it doesn’t cost you anything.

I hope you enjoyed this article. Please leave a comment if you found this useful. Please also share which topics interest you. 

Thanks for choosing wellth!

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