The First Step to Investing: Understanding Compound Interest

First thing is first – do you have your emergency fund? Those 6 months of an emergency savings account?

You do? Excellent!

Next – you’re ready to invest.

Really? You’re thinking – but wait, I don’t make much money. I’m just starting out? How could I possibly be ready to invest?

Sure sure, but the power of compound interest will be a lifesaver. You see, what compound interest does is the great equalizer. You could make not a lot of money but with the magic of TIME, you’ll beat out the market in the long term.

Here’s a video I produced about compound interest when I was at Mashable

Basically the EARLIER you invest, the better spot you’ll be in because then your money will work for you. It’s like a snowball going down a hill. The more money it accumulates, the more interest it will make and then those, in turn, make more money. Etc. Etc. You get the idea. Money + more TIME will ensure you’ll have a nice nest egg when you need your money. So you don’t need a lot to just get started.

So make a commitment now to start investing to make the power of compound interest work for you.

OK OK. I’m convinced. What should I invest in?

First: Retirement

Second: Leftover funds should go into a personal investing account

More on both of these but I want to assure you — you can do this. You have no time to waste.

Now go kick ass with your money!