Finance

It’s Time to Start Investing – Seriously

Investment is one of those things we just want to put off till later. We feel like we’ll get to it one of these days, that there’s plenty of time. The problem is, investments need time in most cases. Time is the best friend of the investor, because of complex mathematical realities like compound interest. Compound interest is all about investments that feed back into themselves. Dividends go back into the pot that includes an investor’s first allocations of funds. This creates a bigger pool of resources to feed investment growth. As this pool increases so do the dividends, which creates a bigger pool, which creates more dividends, which makes a bigger pool……on and on and on.

You can immediately see how time is on the side of the investor who invests this way. But this isn’t the only way that time helps investors. There are other investment types which have a lot more to do with skill than time. But skill is another resource that’s stored up gradually. In any type of skill that matters, nobody gets good overnight. Instead, it can take years or decades to master the thing you’re interested in. This is another reason to start taking investment seriously now. Without the time to master new investment skills, you won’t be able to make a lot of money.

One example of an investment that works this way is spread betting. Spread betting investors use trusted providers like ETX Capital, to make value bets about stocks, indexes, Forex currencies, and more. Rather than owning stocks, as one would do in models where compound interest would be a primary concern, the investors “own” the right to make money if an entity’s value changes in a direction they anticipated. The user chooses the period of time, as well as the specific asset upon which to bet. At the end of time, if the value has changed according to plan, the investor makes money. If the value changes in the opposite way, the investor loses money.

There are many other types of investment, some that require only passive attention from the investor and some which require active management. In all cases, however, time is one of the biggest assets in the investor’s hands. Time gives options. If you make a mistake because you didn’t know enough about your chosen investment style, or simply because circumstances went in the wrong direction, you’ll have more chance of recovering yourself the more time you have. If you create a model for which you are seeing slow steady growth, you’ll have more growth the more time you have to wait. If you have seen your investments pay off over thirty years during the first half of your life, you’ll be glad to have the rest of your life to enjoy your wealth. There are many other reasons that time is one of the best assets of the investor, but you should appreciate the idea by now. In any case, start investing now if you ever plan to do so at all. You’ll be glad you did, and you’ll learn a lot as you go.

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