There’s a famous saying that the best time to start was yesterday, and the second-best time to start is now. These words can be applied to almost any situation, including investing.
While many people make excuses, delay investing, or try to time the market perfectly, the simplest way to succeed as an investor is to start today and stay consistent over the long run.
So, why is now a great time to start investing? Let’s take a look:
You may be able to buy stocks and more at a discount
After explosive growth in 2021, the stock market has slipped in 2022. As of November 2022, the EURO STOXX 50 index is down roughly 15% this year.
Meaning there are opportunities to buy stocks, exchange-traded funds (ETFs), and other securities at a discount.
Ask any seasoned investor what the most valuable asset is, and they’ll probably answer with just one word: time. Compounding interest is the money you earn on the money you’ve already earned.
Say you invest €1,000. After one year, your investment earns a return of 8%, leaving you with €1,080. The following year, you earn another 8%, but this time, it’s earned on €1,080. This increases the value of your investment to €1,166. If you do nothing else with your initial €1,000 and continue earning 8% per year, you’ll have €4,660 after 20 years.
That’s the power of compounding interest.
As humans, we love building habits. This is true for good habits, as well as bad ones. If you start investing today and commit to putting away €50 every week, it will quickly become a part of your routine.
Sure, you might miss having the money at first, but after a few months of sticking to your routine, you’ll establish a good habit that your future self will thank you for.
Some financial advisors say there’s no such thing as a bad time to invest. We don’t mean to say there aren’t certain situations where you’re better off sitting on the sidelines. But, if you’re investing for the long run and have the patience to let your money grow, the odds are in your favor.
The stock market may be unpredictable from day to day, month to month, or even year to year. However, over time, investments in the broader stock market have proven to return around 11% per year. That doesn’t mean your investment isn’t risky, or you’ll earn an 11% return yearly. You can certainly lose money or watch your investment move in any direction.
Nevertheless, if you have money to invest and the patience to let it grow, history tells us that you’ve got a good shot at profiting from your investment.