When I started seriously thinking about investing, I had just graduated college and possessed a grand total of 10,000 PHP (about 250 USD) in savings. With an amount that tiny, I immediately considered just parking the money in a regular savings account until I had something bigger to invest. After all, can you really start investing with just 250 USD?
It turns out you can. And you should.
Burying your money underground
There is a Bible story about a king who had to go on an extended trip and entrusted his three servants with his estate. While the first two servants decided to invest the money given to them, the third servant dug a hole in the ground and buried his share. When the king returned, the first two servants’ money had grown by a significant amount due to the interest accumulated from their investments. However, the third servant had nothing to show for it and merely returned the original amount to his master (counting inflation, it was actually worth less).
The king handsomely rewarded the two investors, while the third was put behind bars for his foolishness.
Reasons for investing
- You earn while you sleep: While the penalty for not investing seemed quite harsh in the story, it can really feel like you’re stuck in prison when you park your money in your wallet and watch it stagnate. On the other hand, earning passive income with investment opportunities like mutual funds, bonds, and stocks can be liberating. Knowing your money is growing even without you doing anything is an exhilarating experience.
- Time becomes your ally instead of your enemy: Another reason to start investing sooner is to take advantage of time. Investing when you’re just about to retire is a bad idea since you’re fighting against the clock. However, investing as early as you can (some experts even argue you should start as early as grade school) gives you all the time in the world to let compounding interest work for you. It is often said that 50,000 invested today is going to be worth 1,000,000 ten years from now, and this is certainly possible with the right investment strategy.
- No shortage of what to invest in: You can literally take whatever money you have right now and start investing in a diverse range of assets. However, although there are hundreds of investment opportunities, the most popular and most stable are often mutual funds, bonds, and stocks. The next post I’ll be writing talks about these three and why they’re the best place to start.
- Buying and selling is automated: When we think about investing, we often imagine the screaming stock brokers yelling “Buy!” and “Sell!” on the exchange floor. Or we think about sitting down in a bank and having to sign a stack of papers while trying not to look like an idiot. With the advent of the Internet, your investing is done purely online. The process is simplified and there is no need to get in a lengthy conversation with someone to get your order filled. Of course, you may still need to put your John Hancock when you apply for an account with your local broker, but the rest of it can be done on the Internet at your own convenience.
- Guidance is everywhere: The major fear most beginning investors (including me) have is their lack of experience. While this is true, there are plenty of resources online that will teach you the fundamentals that you need to know. Furthermore, I’ll be directly posting my experience with a paid membership service where they give detailed guides on which stocks to buy and sell and at what prices. I’ve been using this membership system for more than two years now and it’s worth the monthly fee of 10 USD. Even if you don’t plan on becoming a member, I’ll point out where you can find free resources.
- It’s the fastest way to becoming financially free: In the end, we all want to quit working and have passive income support all our needs. The fastest way to achieve this (other than winning the Powerball) is to invest in trusted assets. There are plenty of success stories from regular people who have supplemented their income through investing. And of course, there’s Warren Buffet.
While I can’t guarantee that you’ll end up like Warren Buffet, I hope you managed to seriously consider starting your investment portfolio. It may not bear fruit in the short run, but you’ll be thanking yourself when you retire a millionaire.