Maybe you agonize over every major decision you make in life, treating each one like you are deciding whether to deploy a nuclear bomb. Maybe this whole adulting thing is new to you — you just landed your first real job and feel like you should take another step by investing.
Whether you've just finally been able to legally drink or you're older and your idea of a perfect night is being in bed by 9 p.m., it doesn't matter. The right time for you to begin investing is now.
Spoiler Alert: Invest Now
One important life lesson that isn't usually taught in schools is the sooner you begin investing, the better off you'll be.
You can thank the magic of compound interest for that. The more years your money is parked in an interest-bearing account, the greater the growth it will see.
Want to know how dramatic of a difference compound interest makes? Assuming a 6 percent rate of return, a 20-year-old would only have to save $361.04 a month to reach $1 million in savings by the time they reach 65 years old.
That figure increases to $499.64 a month if you don't start saving until you're 25. If you decide to skip saving until you're 35, you'll need to save $990.55 a month to reach that goal. By the time you're 50, you'll have to save $3,421.46 to save that much by the time you're 65.
That's a huge difference. Not many of us will have an extra $3,000 lying around every month, but with a little scrimping and saving, finding $361.04 a month to invest is definitely doable.
Getting people to invest now for retirement isn't always an easy feat, though. It's hard to delay instant gratification when you can spend money on entertainment rather than on something that won't happen for another 45 years.
To help get you started, envision your savings as more than just retirement savings. Some vehicles, such as Roth IRAs, allow you to take your own contributions out at any time without penalty. You can use those savings for a more immediate goal than retirement, such as buying a house.
Even if you find the financial world intimidating, you can park your money in investments that require very little work. You don't even have to fully understand how it works. If the idea of cryptocurrency as an investment has you scratching your head, don't worry. We have options for you.
Whatever your motivation and interest level is, after a few months of seeing your balances grow, you'll be glad you decided to take the leap.
How To Get Started
Because investing for newcomers can be incredibly intimidating, you may not want to do anything drastic or time-consuming right away. If you are more the sort of person who likes to wade into the water rather than cannonball in, don't worry. There are painless ways to begin the investing process. You don't need a fortune to get started, either.
If you have a 401k offered to you through your workplace, this is one of the easiest ways to start investing. You'll select the percentage of your salary that you want to invest out of each paycheck. Most companies will also provide an employer match — they'll kick in an additional percentage to your account as long as you put in a certain amount.
To help you determine how much risk to take on, you can take short investor profile quizzes. If you want to skip that step, you can simply enroll your money in a target date fund. You'll pick the decade you expect to retire and your assets will automatically be allocated for you.
Signing up for your 401k can take you as little as 10 minutes.
Certificates of Deposit (CDs)
One secure way to invest is through your bank with a CD. You won't get outstanding interest rates on these, but they are extremely safe investments.
If you only want to tie your money up for a year or two, you'll easily find an annual percentage yield of 2.5 percent right now. If you don't mind holding your money in a CD for longer than that, perhaps as long as five years, you'll be able to find 3 percent rates.
Savings bonds are a type of investment the older generations are well familiar with. While they aren't going to be rock stars when it comes to the interest rates, treasury bonds issued by the government are safe to hold. If you're the risk-averse type, this might be a good investment for you.
If you don't mind the risk, you can opt for corporate bonds through your brokerage account.
Lending Money to Small Businesses
Thanks to the rise of crowdfunding, would-be investors have more options now than ever before. If you like the idea of lending money to small business owners who are trying to make their dreams come true, you can invest in StreetShares.
An online lender, StreetShares focuses on lending money to small business owners who are military veterans. Although there is some risk involved because your investments are not FDIC insured, you'll be given a 5 percent return for your investment.
It only takes a couple of minutes to sign up, verify your bank account, and start investing. You can opt to contribute as little as $25 or as much as $500,000.
The Stock Market
If you want to sign up for a brokerage account, it can be a great way to do some extra investing. There is no shortage of online companies if you don't want to stop by a brick-and-mortar institution, including the online options of TD Ameritrade and ETrade. With TD Ameritrade you don't need to reach a certain investment threshold before you start investing. You can begin with just a few dollars.
You can turn it into a game, making it a secondary investment in which you use your discretionary funds to pick your favorite stocks, ETFs, or mutual funds.
You'll find that with this method of investing you may end up spending more time on it, investigating each stock you're considering. For some people, that can be great fun, while for others it will be tedious.
Jump Right In
There's no better time for you to begin investing than right now. Every month you wait is a missed month of earnings. Even if you start small, it will pay off big in the long run. The great thing about investing is you'll become more motivated as you see your progress.
Stop debating and delaying. Take action, and your future self will thank you.