When you think about investing in terms of compounding and time, it’s easy to understand why people would risk their money for a potential return. You may remember learning about compound interest in math class, but the principle is simple: the returns that you earn on money can be compounded, and then they start to earn returns too. When you give your money plenty of time to compound, the growth can become exponential.
How to Start Investing
The advent of online investing has made it easy to start investing. Many online brokerages don’t require a minimum amount to start, so you could start with as little as $50. Some types of brokers, like full-service brokers and robo-advisors, will even select your investments for a truly hands-off approach. Be aware that all brokers charge a variety of fees for using their services; you should understand them before signing up.
You also need to understand what type of account you will open, how much you have to invest and what you will invest in. Most new investors would be wise to invest in low-cost index mutual funds and ETFs rather than picking specific stocks or bonds. This is because funds allow you to hold a piece of tens or hundreds of different securities and many are well diversified and affordable. With whatever strategy you choose, make sure you do your research and understand all of the risks involved.