Getting started in investing can be daunting. There are new concepts to learn, ideas to understand, and decisions to make. It can be tempting to delay investing as we focus on everyday concerns, but here’s why you should make the effort to start investing right now.
1. There is no time like the present
Life is busy, and making decisions is hard. But as tempting as it can be to put off today what we can do tomorrow, when we do this with investing it can cost us. Investing in ASX shares, bonds, or property is done to generate returns on our investments. When we delay investing, we miss out on those returns.
If we reinvest the returns on our investment we start to generate compound returns. These are returns on returns. The sooner you start investing and generating returns, the sooner you can start compounding your returns. This allows for accelerated growth in portfolio value.
2. It doesn’t have to be hard
Many people put off investing because they do not understand the stock market or find the thought of picking between the 2000 or so shares listed on the ASX overwhelming. These days there are many exchange traded funds (ETFs) available on the ASX, such as the Betashares Australia 200 ETF (ASX: A200), which can give exposure to the top 200 shares on the ASX in a single trade.
Broking accounts offer minimum share trading limits of around $500. This means you are not forced to take a large position in a share. You can spread your investment funds across a range of ASX shares to diversify your portfolio and reduce risk. ASX 20 shares such as Woolworths Group Ltd (ASX: WOW), BHP Group Ltd (ASX: BHP), and Commonwealth Bank of Australia (ASX: CBA) are popular choices.
3. Small amounts count
Don’t think you need huge amounts of money to start investing – you can do it with your spare change. Every bit adds up and over time may surprise you. Apps such as Raiz can be used to automatically invest digital change. You can also do it yourself by setting aside small amounts on a regular basis. The key is consistency.
Some brokerages allow you to invest in certain ETFs for as little as $50. The important thing is to get started, not how much you get started with. Making long-term investments is an investment in you as much as it is in the share market.
There is never a ‘best’ time to start investing – the best thing is to just get started. Spend the time to get to know your investment options and aims. It’s your future you’re investing for.
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Motley Fool contributor Kate O'Brien has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.