Say hello to 2019! We’re here to help you easily make smart money moves this year so you can save more and spend more time doing the things you love.
Here’s a resolution you might be able to check off early: Start investing.
Instead of sitting on cash, take advantage of a beautiful thing called compound interest and watch your long-term savings grow. Years from now, you’ll be grateful you hopped on the investing train when you did.
You can always start small and increase the amount down the road, like after you (fingers crossed!) get that raise and bonus. Here are three good reasons to start investing right now.
» MORE: Tackle these money goals in 2019
1. Your money will work harder for you
You’ve left $10,000 sitting in a bank account earning 1% in interest. In five years, you’ll have a little over $10,500. Not bad, especially for a relatively short-term savings goal, but over the long haul you could be earning more.
Assuming the stock market averages 10% annual returns, as it has historically, that same amount could be worth a little over $16,000 after five years. That’s a difference of about $5,500. (Even assuming a more conservative 6% growth rate, that’s $2,800 more in your pocket.)
But there’s a key caveat: Just as stocks can go up, they can also go down — and sometimes by a lot. The stock market has always bounced back from such losses, but it’s wise not to invest money you’ll need in the next few years.
Try our calculator and see for yourself.
2. It’s easier than your other resolutions
Some New Year’s resolutions are a massive challenge, like reading “Infinite Jest,” running a marathon or learning Icelandic. Compared to those, investing is a walk in the park.
To start, you put funds into a brokerage account. (That’s an investment account that lets you buy stocks, bonds, exchange-traded funds, mutual funds and even currency.)
There are different types, but an online brokerage account, which you can open through an online broker, lets you purchase and manage your own investments.
If you prefer to be more hands-off, a robo-advisor — that is, an automated service that chooses and manages your investments for you — might be the way to go.
3. Do it while you’re motivated
Maybe you’ve seen studies about how most resolutions fail by February. That’s why now, the very start of the year, is the best time to tackle investing, when you’re the most motivated and inspired. Unlike some other resolutions, you don’t have to keep working hard at it to see meaningful gains.
Getting an early start in investing — even if you contribute a small portion of your paycheck — can open up your opportunities in the long term. (For some families, smart investing was the key to retiring early.)