Start Investing – NOW! Don’t Wait Until It’s Too Late!

One of the most important things women can do to ensure their financial fitness is to just start investing – now! Don’t wait because time is not in your favor. And, women think we have to be perfect and know everything before we start to do anything. Many people think you need a lot to start investing, but you can invest as a little as $10.00 per week.

It’s important to understand the difference between savings and investing. Saving money won’t make you rich, but it will be there when you need it. Savings are when you put your money in checking accounts, savings accounts, certificate of deposits, money market accounts, U.S. Savings Bonds, etc. Investing involves more risk, but if you make good investment decisions, your investments will yield higher returns over time than savings. Investing is when you put your money in stocks, mutual funds, bonds, etc.

Let’s look at what happens when you invest $10.00 per week at 8% beginning at age 30. At age 65 your initial investment of $18,200 will have grown to $99,402. That’s $81202 in earnings. Now, let’s look at what your investment would be if you started 10 years earlier at age 20. Your initial investment of $23,400 would have grown to $228,563 at age 65 -- $129,161 more in earnings.

I call this the magic of compounding interest and I would give anything if someone had explained this to me when I was in my 20s and that I would have listened! But, when I was in my 20’s I thought retirement would never happen to me – it was many, many, many years away. I’m encouraging women to replace the word retirement with financial independence. You get to choose the age of your financial independence. So, when you’re investing $10.00 a week for your retirement say to yourself “I’m investing $10.00 per week for my financial independence.” Investing regularly and automatically gives you the opportunity to determine the age you want to achieve financial independence.

On the other hand your savings simply cannot keep up with the cost of inflation, which is why it’s so important to include investing in your financial plan. The Women’s Institute for Financial Education (www.wife.org) has a great online calculator to show you the effects of inflation. For example, in 1997 a car cost $14,500 – in 2006 the cost was $27,958; 1997 a loaf of bread was $1.65 and in 2006 it cost $2.11 and then there’s the cost of a gallon of gas – 1997 it was $1.19 and in 2006 it cost $2.19. And, all you have to do is look at the price of gasoline today to know that it’s a lot more than $2.19; in our area its well over $3.60 per gallon.

Warmly,

Marcia