Learning To Find The Time To Invest

I can still remember as if it was yesterday, seeing a commercial that shows how investing is seen as something important from the age of 40. It becomes a middle term event, whereas research proves we pay more attention to things that happen in the nearer future. When you are in your twenties and starting out as an employee, you are more likely to think about paying your rent, your student loans, and other things that are more necessary at that moment. At every age group, you are likely to have other priorities, and when retirement is edging closer, investing becomes more important.

As a teenager, I was not thinking a lot about the importance of investing and that compounding effect is related to time in the market. Time that we think we don’t have because of school, work, sports and a social life. However, someone close to me explained that the thought of investing well takes a lot of time is a misconception. I am lucky to be given this advice and everyone has a right to know this in my opinion.

Most of us have time when we want to I have been guilty of saying that I don’t have time to do something which is sometimes true. However, when we want something, it’s often possible to make time. As with everything in life and if you don’t want to make time, then it’s often not a priority for you. This is a personal decision to make because our finances are our own responsibility. However, most of us want to have a life where you don’t have to think a lot about how much your groceries cost, the education of our kids, paying off our own student loan, mortgage and many other things. A financially more comfortable life opens up the option to have more time to do what you desire.

For most of us, we have to exchange our time for work. To make money, you have to have it at first because without it, it’s difficult to invest. Therefore, it’s important to work and save as much as you can. Whatever you do, there will be difficulties along the way and it’s easier to deal with them when you like your job. It’s exaggerating to always wake up with a smile every day but think of the position you are in and put the pressure of work in perspective with the pressure of the uncertainty of having a meal that day. Many human beings face this every day. This helps me ground myself and never feel sorry for myself because many of us are in a privileged situation.

Make time to compound It’s not a pipe dream when you hear that it’s possible to invest money you can afford to lose passively and in the long term your wealth increases significantly. Many experts such as Warren Buffett advice investors who don’t have a lot of time to invest in index funds with a low commission fee and don’t look at it for a long time. The latter is important because in the short term there are cycles of ups and downs in the economy which affects the stock market. Looking daily or even a few times in a day at your account could lead to trying to time the market, which isn’t possible for many of us. The S&P 500 has a yearly average return of nearly 10%. Below, I will highlight several scenarios.

• An investment of 1000 dollars/euros with an average yearly return of 10% becomes 17.449 dollars/euros after 30 years.
• Starting with an investment of 500 dollars/euros and adding the same amount for 30 years with an average yearly return of 10% becomes 90.972 dollars/euros.
• Starting with an initial investment of 1000 dollars/euros and adding the same amount each following year with an average yearly return of 10% becomes 181.943 dollars/euros after 30 years.

Reading this could make a decision to invest in an index fund a no-brainer. However, it’s important to notice that the stock market on average returns 10% yearly. There will also be years along the way that will be negative and that this is based on the past, which isn’t a guarantee for the future. Below there is a graph that reveals the returns of the S&P 500 in the last 30 years.

Becoming comfortably uncomfortable Daniel Kahneman and Amos Tversky revealed that losses loom larger than gains which is how we are wired as human beings. Being aware of this makes it possible to control your initial instincts and focus on the high probability that your goal will be reached in the long term.Therefore, it’s important to be comfortable being uncomfortable while starting to invest. I will never forget the first time seeing virtual gains and losses, but not reacting to it. In the short term, everything can happen. We don’t even know what will happen in 5 minutes, but we make predictions which often come true.

On the stock market, you are likely to be a minor player among market makers who aren’t thinking about you. Beating the market is possible because otherwise nobody would have done it. However, most of us are confronted with a lack of time combined with a desire to invest. An index fund can also be the solution for you. It doesn’t take a lot of time to do your research of finding reliable index funds with a low commission fee, and as a result the probability of becoming financially comfortable in the long-term increases.

Time is one of the most valuable things we have, and exchanging it a little for a peace of mind when retirement comes around the corner seems to me a bargain. Most of us can do it, but not all of us will follow through and this is a personal trade-off to make.

Thank you for reading and I wish you a nice day.

This article is for informational purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any major financial decisions.