Investing Basics

When your career is getting off the ground and your income is growing, it’s time to start investing. Investing is the key to building assets for the future — so you’ll have money for buying a home, putting kids through college, or paying for other things that are important to you, but may cost more than you could afford as part of your regular budget. These goals may not be what you’re focused on right now, but the sooner you start investing, the better the chance you have of being able to afford them when they are your focus.

Yes, investing sounds exactly like something your parents would do — so that might put you off at first. After all, you’re finally making your own money, and now you’re supposed to invest it like your parents do? What ever happened to living the good life before you get tied down with responsibilities?

But investing is not just for older people. In fact, when you’re young is usually the best time to invest. When you start investing early, like in your 20s, your money has longer to grow, which means you have a better chance of ending up with more of it — though with investing there are no guarantees.

Starting early is important because of a fundamental investing concept known as compound growth, or simply compounding. With compounding, the dividends or interest that your investments generate are reinvested, giving you a larger base on which future investment earnings can build.