How Investing Early Can Benefit You in the Long Term

If you’re having trouble with money, you’re not alone. More than 31% of Kuwaiti residents said that they would not be able to come up with funds in the event of an emergency (Financial Inclusion Report, Institute of Banking Studies – Kuwait). This article will help you lay out your long term investing plan to keep you on track towards your financial objectives and help secure yourself a better future.  Even if retirement seems like something that is eons away, it is never too early to start investing and saving. In fact, the earlier you start, the more likely you are to achieve your financial goals by retirement because investing tends to be kindest to people who continue with it the longest.

How Starting Early Can Benefit You More

The thing about most investments is they take a long time to grow. But, when they do, they can grow exponentially. 

Did you know that if you had invested $5,000 at Apple’s IPO, you would have nearly $1.5 million today? That same $5,000 investment ten years ago would be worth about $50,000 today. Still good, but not as great as those IPO, or early, investors who really cashed in.

If you invested $5,000 in Apple last year, you could have had a little more than $6,000 today. So, the long game is well worth it because it gives your money as much time as possible to work smarter and yield you the highest returns.

Investing Early in ETFs

ETFs, or exchange-traded funds, have several characteristics that make them an ideal investment tool for young investors who may not have much cash to invest. Exchange-traded funds are great because they make it possible to build a diversified portfolio with a fairly low investment. Additionally, ETFs trade through the day, which provides investors with sufficient liquidity. 

Other benefits of early investing in ETFs include:

– You can use ETFs to participate in a wide array of different markets. There are more than 7,000 ETFs globally.

– Most ETFs use a low-cost indexing approach.

– Some exchange-traded funds capitalize on fads or trends, like sustainable investing.They offer a diversified portfolio with limited risk.

 The Power of Compound Interest

Since interest is calculated as it accumulates over time, compound interest supercharges your money to grow faster. As the original investment plus earned income from the investments start to grow together, compounding can even facilitate a snowball-like effect.

The higher your investment amount and investment return, the faster your savings will compound. Over 20, 30, 40+ years, this can really add up. Saving and investing early and often allows you to harness the power of compound growth and make your money work harder for you.

How Does This Work in Reality?

Sarah started investing at 21 when her parents gave her $10,000 cash. Her investment has grown significantly thanks to the power of compound interest and smart investment choices. Every time she received dividends on an investment, she reinvested the money back into the original investment, allowing her investments to grow tremendously already.

Over time, Sarah’s compound interest will make more money than the simple interest will. For example, Sarah’s brother invested his $10,000 with a 4% assumed interest rate per year with simple investment. In 20 years, his investment returned $17,600.

Sarah invested hers with compound interest, and over those same 20 years, it returned $21,068. That is the power of compound interest.

How Can We Help?

Ready to start making your investments work harder, so you don’t have to? SmartWealth is here to put your money to work. We strive to deliver the best-in-class digital financial services to our clients by providing financial advice, access, and exposure to global markets in a cost-effective manner.

Our investment plans are diversified, including a range of ETFs for stocks, fixed income instruments, commodities, and more, allowing you to maximize your investment exposure while minimizing risk.

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