Why Investing Now Is Better Than Saving Later

There’s a lot of conflicting information about whether you should start investing sooner rather than later, and the answer to that depends on your personal financial situation. However, if you make it a priority to invest in your future, even if it’s just a small amount, you can reap the rewards of compounding interest for many years to come. This article will explore why it’s important to start investing now and how that differs from saving, which is putting money aside for short-term goals like a new car or a home, or paying off debt.

When to Start Investing

The old saying “the early bird gets the worm” is especially true when it comes to investing. By starting your investing journey at a young age, you can take advantage of the power of compounding over time and significantly increase your retirement savings by the time you reach your late 60s or early 70s.

This can have a profound impact on your financial independence and quality of life in retirement, which is why it’s so important to get started investing as soon as you can, no matter your age. Investing later in life can still have significant benefits, but it’s important to prioritize paying off any outstanding debt and building an emergency savings fund before committing to long-term investments.

A common reason people avoid investing is that they are concerned about the risks associated with stocks. While there is a level of risk in any investment, it’s important to remember that over time, the stock market has produced historically positive returns. Moreover, you may be able to reduce your risk by diversifying your investments into other asset classes, such as bonds and real estate.

Another factor to consider is that the value of cash can depreciate over time due to inflation. By investing in the stock market, you can help preserve the purchasing power of your savings and ensure that your money will be able to buy more of what you need in the future.

As a young professional entering the workforce, it can feel like retirement is far away, and it’s easy to put investing on the back burner in favor of other expenses. However, by making retirement a priority and contributing to your 401(k), Roth IRA, or Thrift Savings Plan, you can set yourself up for a better financial future.

Lastly, by beginning your investing career early, you learn to save regularly, which helps develop good spending habits. This will be a valuable skill when you have more wealth to work with and are tempted to spend more than you can afford. In addition, you’ll gain experience in the markets, which can give you confidence to stick with your strategy and weather a few losses along the way. If you’re ready to begin your investment journey, check out TradeZero’s commission-free trading platform. You can open an account and start investing in minutes. And if you’re not sure where to start, our investment guides can help!