Why Bother Investing?

Post date: Oct 17, 2011 10:55:15 PM

Why should people Invest? Everyone always says that you need to start a “nest egg” and prepare for retirement. But it’s hard right? I mean, you have to put money away, when you are already living paycheck to paycheck, you have to find a stock broker, you have to put money in regularly, and pick stocks to buy, and watch the stock market, and worry about if it’s growing faster than inflation, and call your broker if it isn’t, and watch the news, and listen to analysts, and..... well you get the point. You have to consider a lot of things if you want to invest. But what I just described to you isn’t what most people do, and it definitely isn’t what most people need to be doing. What I described is active investing. It is possible to be a passive investor and make plenty of money for retirement. Wouldn’t you rather put a few dollars away and forget about it. Then when you are older and ready for retirement you look back and have a million dollars? Of course you would. And it isn’t too hard to do. Think about investing $4 a day. In 250 days, you would have $1000, and if you get an average return, say 10% a year, you would have over a million dollars in 47 years. Don’t believe me? Check out this website:

http://www.moneychimp.com/calculator/compound_interest_calculator.htm

Now that is pretty easy right? $4 a day until you are ready to retire? Sure, but think about this, as you get older and progress in your career, you can afford to put more money in the markets so you could theoretically put $5 or $10 a day. If you put $10 a day in the markets that would be $2500 a year, or nearly 2.4 million by retirement. Is $2.4 million enough to retire on? You bet it is. Now this is an extremely simplified example, but you get the point. In practice it isn’t really much harder to do than this. So if you are ever wondering about why to invest, just think that for not too much effort in the beginning, you can make enough to retire on. And that means cruises and golf all day, or whatever you do when you’re retired.