No matter what age you are or even your level of employment or economic position, it may be a good idea to start investing now, even in a small way, for eventual financial security. Some people feel they need every dollar they make to get by from one paycheck to the next. While this may be true for some, there are others who spend significant amounts of money on insignificant things. They could be investing that money away into a broker account that, over time, could lead to huge savings and a comfortable retirement with the power of compounding and dividends.
It isn’t hard to get started. All you need is $100 to $500 to open an account, in some cases less and anywhere from $25 to $50 monthly to continue building your stock or dividend growth portfolio. In fact, a young person aged 20 could deposit $1,000 and then not another dime. In forty years he or she might have tens of thousands of dollars. The stock market has followed fairly predictable patterns since its inception in the 1800s in New York City. Although historic events like the Great Depression – Covid and several global wars have impacted its activity, the gains and losses remain fairly consistent, with most investors earning a predictable return on their investment.
Of course, no one can predict what the future holds, or whether the pattern will continue. And none of us should invest more money than we can afford to lose but just in case the world economy crashes one of these days. But with steady deposits and dollar cost averaging that continue to compound and earn dividends over time, a sensible and prudent investor can substantially increase the amount of money going for retirement or a dream vacation at some future point.
If you are thinking about opening an investment account, do a little online research for more information. Visit sites like Robinhood or Webull to see how the process works. Start reading financial web pages for details about the latest stock prices and market trends. Do a little paper trading by following the daily stock news. Instead of actually purchasing stock, however, work it out on a piece of paper by pretending to buy a certain amount of stock for the specified price and then watching to see how it performs over the following week. Chart your gains or losses to figure out whether your stock deal was successful. If you do this for a few months, you will soon learn to understand more about the stock market and how to buy and sell like the pros.
Even if your budget is small, try to set aside a little money to open an investment account from any windfalls that come your way from job bonuses, inheritances, or cash gifts. Some people set aside their annual job raise, or part of it, as part of their investment strategy. Then, as your budget becomes better with paid off bills or grown-up kids, you may be able to start having a standard monthly amount deducted automatically from your paycheck and deposited into your dividend account. This could take the form of a Roth IRA (individual retirement account), a money market fund, a mutual fund portfolio, or individual stock shares.
It probably is a good idea to take an investment class online or sign up for a financial planning seminar. Success may be just a few years away if you start now and plan right. Also note that investing and day trading are two totally different things, if you are a dividend investor the you will add small amounts to your dividend stocks and build your positions over time, you will continue to collect dividends while you invest.
From my own experience, dividend stocks can also grow and not every stock needs to be tech related, there are many great companies that pay dividends that are in the growth state, the power of compounding will greatly benefit you even if you invest small amounts every month.