I have been getting quite a few questions from different people on the topic of when is the right time to start investing into the stock market. This is not surprising question to me as I have asked myself this question many times over and as perhaps some of our answers change this one has stayed the same. The right time to start investing is NOW, not six months from now, not when you come back from vacation, not when you build up a large sum of money, not when you win a lottery, not when you get married, not when nothing! Now and no excuses, because that is all they are! Procrastinating is a killer of dreams, retirement, relationships, health, opportunity and thousand other things.
Time is really important factor that we have here on the planet and compound interest relies a ton on time. Compound interest is the most powerful weapon towards retirement you can have and many don’t even realize or take it for granted. Many people look at the short end of the stick when talking about compound interest and its full effects, but compound interest should be looked at over 10, 20 or even 30 years of time. That is the magic, those 4% annual returns add up to the other 10% next year and 27% like we had in 2013. No wonder Albert Einstein said it was “the greatest mathematical discovery of all time”.
We live in extremely technologically fast world when compared to 10 or 20 years ago. Technology has been advancing at an astounding rate and that my friends is great news even for average investor. With brokerages like E*Trade, Scotttrade and many others, investing has been totally simplified. You can place a buy or sell order very easily now a days. Living in technologically advanced country should be a priority using its effectiveness in investing because developing countries don’t have that freedom.
I strongly believe the process of building wealth requires spending less than you earn. Someone can have a great career and make 100k annually, but if they spend it all there isn’t any money left to invest. Therefore, I preach constantly that in order to be an investor you need get your inner gratification under control. The inner voice that pleads, moans and begs for more and more constantly. If this inner form is not groomed, the thirst for always better, more and now will leave you broke month after month. There will never be enough money or it may seem like it because the account will be always sucked dry.
To truly save means actual act of trying save a percentage of income, not just talking about it. No one has to make significantly large amount of money just to save. We are all capable in doing so no matter what is the salary. Being creative and being somewhat not wasteful will do you wonders. Savings rate is so unique because the more you save, the more money you will have to invest, in which not only your income will grow if investing in quality dividend stock, but your savings rate as well. Savings and investing rely on each other, therefore if never started it can never be created.