When is the Best Time to Start Investing?

by financialmom on February 19, 2010

in Investing, Money

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When is the best time to start investing?  I hear this question a lot, and here’s how you decide:

Right Now

Once you have a fully-funded emergency fund in place, and all your debt paid off (with the exception of your mortgage), then when is the best time to invest?

The very best time to invest is right away! Unfortunately, many of us fail to understand how valuable even a few years can be to making a big difference in the total you have earned during your investing years.

For the Kids

Many of my children’s friends are just graduating college, and new to the work force or just about to enter the work force.  I tell them they need to start investing as soon as they start earning money.

The exception to this would be if they have school loans. This may be controversial to some, but since I am a huge advocate of being debt free, I say the earnings of those first few years out of college should be concentrated on paying off the school loan debt.

If that means you live like college students the first few years, so be it. It will change your life to be debt free at a young age, and there is still plenty of time to invest for retirement.

Too many kids come out of college with a spending spree of their salaries – for a new car, wanting to buy a house right away, charging on the credit cards, and generally putting themselves in a perpetual debt cycle that will dog them forever.  Suffice it to say I hate debt!

The Magic

What is the magic here? It’s the power of compounding, of keeping your money and its earnings invested, so you are earning a return not only on your investments, but also on the earnings of your investments.

The sooner you start investing, the more time you have for your investments to grow. You will be amazed at the difference compounding makes in your returns, by simply leaving your investments and their earnings alone to grow.

Time Is Your Friend

Time is one of your biggest friends in the world of investing.  You will be amazed at the difference time can make. So you can do this the easy way by starting as early as possible, or you can do it the difficult way by waiting until you are 50 years old and panicking about your non-existent retirement fund. Starting early and having the benefit of time will allow you to invest smaller sums of money to reach your financial goals.

Having a long time to invest also smooths out the volatility of the market for you, reduces your risk, and allows you to focus on the long term upward trend of the market.  Slow and steady really does win the race.

Wish I Was 21 Again

Ok, maybe you are wishing you knew all this at age 21.  Maybe your parents weren’t investors, and nobody ever told you it’s a good idea to start investing at a young age.  Or maybe you always thought you would do it, and just never took the time to figure it all out.  Now you are 30, 40, 50, or older, and you have never been an investor.

It’s never too late to startYou will probably need to put aside more money to invest each month to reach your financial goals than if you had started younger.  Get over it, and do it.  Find yourself a financial advisor you can trust, get a financial plan, and become an investor!  It could be one of the best gifts you give yourself this year.

New Profile Pic 2599R When is the Best Time to Start Investing?Pamela Otten is CEO of Pamela Otten LLC, a Registered Investment Advisor. She loves to work with women business owners and entrepreneurs, and women in transition due to job change, death, or divorce. Pamela will help you set and reach your financial goals, educate you to understand your investments, and teach you how to do more charitable giving. Pamela is a Qualified Kingdom Advisor (www.kingdomadvisors.org), trained and committed to integrating biblical principles with her investment advice.

cc smallest When is the Best Time to Start Investing?Photo Credit – Michel Filion

Financial Planning, Investment Advice, and Investment Management provided through Pamela Otten LLC, Registered Investment Advisor.

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