Investing! Everyone’s talking about it!

Your mom is constantly nagging you, telling you to “think about your future honey”. And every infomercial ever is telling you to “invest here” and “invest there” and “buy this hot new investing guide”.

But why? Why should you invest? Well there are two reasons…

Diapers and Arthritis

Duh… you should start investing because investing is good for you! It’s what all those financial gurus are always talking about. And they obviously know what they’re talking about.

But is investing really good for you? Isn’t life all about enjoyment and fulfilling today’s pleasures? And don’t people always say that “life is too short” and to “live in the moment”?

Hypocrites, right?

Well consider this little tidbit… you have a 65-70% chance of living to 80 years old (1) . That means that odds are heavily in your favor to live another 50 years! And if Aubrey de Grey (aka Wizard beard) has anything to do with it, you’ll be living another 100 or even 200 years.

So why should you invest?

Because when you are 70 or 80 or even 140, you’ll probably not want to work anymore, because you know… old age, arthritis, and diapers. And think about it, by that point you’ll look back and thank the younger you for putting away $5.00 a day by taking an outer space cruise to Mars or taking a Westworldesque vacation (minus the crazy).

Now this isn’t as clear cut and dry as I’m making it out to be. But if you’re not convinced just yet then maybe you don’t have the right mindset!

The 8th Wonder of the World

Arguably the greatest scientist of all time said it best, “compounding is truly the greatest thing to ever exist, even better than Twinkies” – Albert Einstein

I wish he said that…here’s the real quote:

What is compound interest you ask? Well compound interest is this magical process where your hard-earned money goes out there and makes money for you.

So yes, in this case: 1 + 1 does equal 3!

And how does this work:

warning numbers below*

Well because compound interest works its magic over time! The more time you give it, the more it gives you.  That’s why old Stacey is not happy with 40-year old Stacey, she’ll only retire with $185,000. But she is super happy with young 23 year old Stacey, because she is a millionaire. And look at what happens if Stacey waits until she is 30 to start investing, she literally cuts her million dollars in half by waiting those 7 years.

And if you put this money under your bed instead (besides the smell) you’ll come out with a measly $80,000 in crumpled ones and fives.

This is the closest thing to free money in the world. You literally come out with $900,000 more if you invest it versus putting that money under your bed. Seriously, who doesn’t like free money? (And it’s not that hard to do!)

Think of it like planting a small little seed in your backyard. You plant the seed and water it every day with a $5.00 bill and before you know it, that little seedling is now a big shady tree that gives you $1,000,000!

Put another way: If you only put $5.00 away one time and forget about it in an investment account for 4 decades, you will turn that $5.00 into $273.00. (Pretty sure you can’t do that with a cup of Unicorn Starbucks coffee).

So Where Should You Start Investing?

You can start in lot of different places. Investing doesn’t have to be hard. And in my next post I’ll show you how easy it is and teach you the basics on how you can turn $5.25 a day into a $1,000,000.

Update: The next post is up to show you how to get started with $100!

*the interest is compounding at 10% (similar to the historical S&P 500 growth rate)

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