There is a belief that to invest in S&P/ASX 200 Index (ASX: JXO) shares you need to be a part of the 'rich person's game' and that it's out of reach for the average Joe on the street.
It's easy to understand why. In popular culture, the only investors we hear about are rich scoundrels. Think about it: Gordon Gekko, Jordan Belfort… these guys were hardly model citizens.
Up until recent years, it was quite difficult to start investing. You had to find a stockbroker, pay them through the nose, and try and find winners in the pages of your daily newspaper.
Now, it's a different world. You can literally buy shares in under a minute through an online broker, all without having to pay usurious brokerage fees and commissions. Anyone can access a company's annual report with the click of a button and read 100 different investor's opinions about a share without leaving their desk.
This might not have been great for the finance industry, but it has undoubtedly been for the average Australian. Democracy has come to the share market.
Why it's important to invest in ASX 200 shares
But with this power has come responsibility. In days of yore, investing wasn't really necessary. The government promised to fund everyone over 65s retirement through the Age Pension. Sure, you could top this up with some cash. But with a bank account or term deposit typically paying real interest rates, you didn't really need to 'take a punt' on the share market.
As comfortable as that world might sound, we live in a different one today. With interest rates at close to zero, cash instruments like term deposits don't really cut the mustard as a real investment anymore. Job security is more or less a thing of the past. Most of us won't be working with a single employer for our whole lives. And the Age Pension has moved from a 'universal income' to a 'safety net'. Considering our ageing population, I have severe doubts over its long-term viability.
That's why, in my view, investing is no longer optional. And investing in ASX 200 shares are a great place to start. Now, there are other ways of building wealth, such as property. But ASX shares have several advantages making them an ideal pathway for wealth creation in my opinion.
You can start with as little as $500, for one.
Shares are liquid, which means (unlike a house) you can buy and sell them easily for another.
And many shares will pay you tax-advantaged income (in the form of fully franked dividends) along the way.
So if you haven't already started to invest in 2020, why not take the plunge? Your future self will undoubtedly thank you for not putting it off. And in this brave new world we live in, I don't think any of us can afford not to.
