Charlie MarlowInvesting is like planting seeds today to reap the benefits in the future. It involves putting your money into assets such as stocks, bonds, mutual funds, or real estate with the goal of growing your wealth over time. Unlike saving, which keeps your money safe but doesn’t necessarily grow it significantly, investing has the potential to earn higher returns, although it comes with certain risks.
While volatile in the short term, investing is the best way to grow wealth over time. Over the past 50 years, the stock market (S&P 500) has averaged an annual growth of over 11.7%, outpacing the average inflation rate of 3.1%.
Compound interest or growth has been called the 8th wonder of the world. At 11.7% growth, $100 invested today will be worth $8,358 in 40 years.
For military members and their families, participating in the Thrift Savings Plan (TSP) can help build your retirement nest egg. TSP is the federal government’s equivalent to a corporate 401k plan, boasts low expenses to help your investments grow faster, and offers multiple investment options to meet your needs and risk tolerance.
Investing can seem scary and confusing, but an educated investor is a more successful investor.
I recommend these resources as a launching point for you to learn more about investing:
- Morningstar’s online Investing Classroom – This free resource is by Morningstar, the company that rates mutual funds. Choose from about 60 courses on stocks, funds, bonds, and portfolio building and monitoring. The courses cover everything you need to know, from the basics to advanced techniques and are about 10 minutes each, so you can learn in your spare time.
- Financial Industry Regulatory Authority – FINRA, the Financial Industry Regulatory Authority, offers free Smart Investing Courses to guide you into the world of investing. You can learn about investing basics, investment accounts, investment products, working with an investment professional and more.
- U.S. Securities and Exchange Commission – You can find their free Introduction to Investing page, which includes an explanation of various investment types, how to set savings and investment goals, how markets work, and how to avoid investment fraud. There is also a section dedicated to investing for retirement covering employer-sponsored plans, Federal government plans, and self-directed plans. There is a section to help you understand the implications that come with job changes such as lump sum distributions and rollovers. They also provide resources to help retirees and seniors manage their savings, investments, and Social Security.
If you haven’t already, start investing now, but make sure you are educated in what you are doing, or find a trusted professional to help guide you along this journey. It can be truly amazing to see your money grow over time!
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