Don't Wait for More Money To Start Investing — Start Investing for More Money
It's possible that fear of getting left behind is the only thing leaving you behind.
Gen Z and millennial workers may believe that investing is something you start later, once you earn more, save more or feel more financially stable. But that thinking may cost younger investors significant growth.
We spoke with financial advisors about how to get started saving and investing on a shoestring. They explained that having a lot of money isn’t the only key to successful investing — there is something else you need.
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You Don’t Need More Money — You Need a System
A higher income doesn’t hurt, but it’s not what gets people investing, according to Michael Boggiano, managing partner at Wealthcare Financial.
“What people really need to start investing is a system, not more money,” he said. He suggested setting up a brokerage account as early as possible, getting a basic understanding of risk and, most importantly, consistently investing any amount, even if it’s small.
Boggiano said Gen Z and millennials often take cues from social media that create the illusion that investing is something you do after you’ve “made it.” In reality, he said, “investing is how you get there. The barrier usually isn’t income, it’s perception.”
Brian Hennaman, an advice-only financial planner at Just a Conversation, LLC, agreed that newer investors should avoid waiting to accumulate a “respectable” amount of money and just start now.
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Consistency Beats Bigger Contributions Every Time
New investors just need to start creating the habit of investing, advisors all said. Automation removes emotion and turns investing into a default behavior rather than a decision you have to make every month.
“Consistency and automation are the most important parts of any successful investment strategy,” said Boggiano. “A person investing $200 a month consistently will often outperform someone investing larger amounts sporadically.”
Start Small — Even Uncomfortably Small
Waiting until you can invest a “meaningful” amount often leads to not starting at all.
“Start small if you have a tight budget or inconsistent income. Even $25 to $50 per month matters in the long term,” said Boggiano. Over 30 years, $25 a month amounts to $9,025 in contributions but assuming 7% average returns, it's $28,529 in wealth.
Or, find out what the smallest amount your chosen financial institution allows for and start there, Hennaman suggested.
Time Is Your Biggest Advantage
Younger investors may not have as much money, but they do have time on their side. Boggiano called starting early “one of the most powerful financial advantages you can have, thanks to compounding interest.” Waiting for a higher income often means missing the years where growth matters most. The earlier you start, the more compounding opportunities you have.
The most successful long-term savers and investors “are those who start early, stay consistent and stay the course,” said Norm Cauntay, a CFP at Edward Jones.
Hennaman said that $1,000 invested at age 25 could grow to more than $45,000 by age 65.
“Clearly it pays to invest earlier rather than later,” he said.
Automation Makes Investing Happen
Even the best intentions can fall apart without a system that runs on autopilot.
“Automatic enrollment and automatic annual contribution increases are simple ways to make it easy for young investors to establish those good habits,” said Cauntay.
When investing becomes automatic, it stops competing with your other financial decisions each month.
You Don’t Need To Be Perfect
Boggiano warned newer investors to resist psychological barriers such as fear of losing money, analysis paralysis and the belief that you’re “too late” or “don’t have enough.” These mindsets stop more people from investing than lack of money ever does, Boggiano said.
“The earlier you start, even in small amounts, the more options and flexibility you create for your future,” Boggiano said.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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