The cliche No time like the present is overused. You hear it in the context of buying a house too.
What is missing and not looked at is the why starting earlier in the context of investing makes a difference and how it allows you to grow more wealth.
Reason 1 – Compounding needs time
The most important principle about investing is that the earlier you start your investment journey the easier it gets to build your wealth. This allows your money to take advantage of compounding return. We cover this with examples in our article how compounding is one of the 3 reasons we beat index funds and short term trading on the share market.
Reason 2 – Learning earlier from mistakes
The other reason it is important to start early is that you learn from your mistakes earlier. What this does is give you experience which cannot be learnt from a book.
A mistake you might make as 20-year-old with $500 is not going to be as costly as a mistake you make when you invest in your 40’s and lose your life savings.
Reason 3 – Growth Mindset and psychology
Starting earlier, even with a smaller amount means you learn by doing and as a result, you experience the following scenarios:
- Seeing your portfolio in red and what that feels like
- Patience to allow the companies to grow and therefore your investment
- Developing a detachment to short term price movements
- Learning objective decision making by recognising when emotions like fear and greed influence us
These situations over time build resilience and make one have a much higher stress and risk tolerance.
Current market conditions an opportunity
With the virus crisis and the economy not fully recovered yet, there is no better than to start than now. Certain sectors and companies are trading at a discount. We use the Tabarruk Framework and Screening Process™ to identify these.
To earn more, you have to learn more
The best ‘non-financial’ investment you can make is in yourself.
Educate yourself, sign up to courses learn about investment, look at what successful investors are doing and how they do it.
Be different, as most of the world is working on autopilot and you need to chart your own unique path out of the rat race. This will allow you to make better, rational and educated decisions in your life.
To earn more you have to learn more.
Once you have got this far, you start looking at stocks, ETF’s and all the other options.
As someone who only invests in a Halal and ethical companies, my life is so much easier as my screening for the companies that fit our criteria makes the investing world that much smaller and the ability to pick good companies becomes easier.
Start early but stay for the long term
If you don’t have a long-term mindset, then this article is probably not suited to you.
The reason a lot of people make extremely bad decisions is that they have a get rich quick mentality.
Tabarruk’s investment success is due to the long-term investment approach we take.
Regardless of the price of the stock going up or down in a business you’ve invested in, it won’t you because you’ve understood the business and their long-term prospects.
If anything, when the price is down, you just buy more. We cover this in The secret to buying at the bottom article.
Solid businesses always find a way to thrive and the market always recovers.
This is not financial advice. Please view our disclaimer.