Many advisers would have you do some major evaluation of your personal finances before investing in stock. Gimme a break! Anyone can AND SHOULD start investing in stock when they get their first job. And in my book, its the best thing you can do for you! Typically, you need one (1) share to qualify and you can add to your stock investment program with as little as $10-25 regularly. Is that going to destroy your budget or put you in some kind of financial jeopardy? No way. And where else can you get the kinds of return stocks have historically generated? Very small investment, very little individual effort, very high potential --- This is not rocket-science!
The Younger the Investor, the Greater the Potential:
Compounding growth works miracles for the young investor. At 12% annually compounded growth, money doubles each six (6) years. Take a lump sum of $1000, what's it worth over time?
|
When |
$ Value |
|
now |
$ 1,000. |
| 6 years |
$ 2,000. |
| 12 years |
$ 4,000. |
| 18 years |
$ 8,000. |
| 24 years |
$ 16,000. |
| 30 years |
$ 32,000.
|
So what if you invest $25 per month and your stocks grow 12% annually, what's it worth over time?
|
When |
$ Value |
|
now |
$ 0. |
| 6 years |
$ 2,727. |
| 12 years |
$ 8,109. |
| 18 years |
$ 18,732. |
| 24 years |
$ 39,700. |
| 30 years |
$ 81,088.
|
But you say, "What if my stocks don't gain 12% annually?" Well, you simply won't accumulate that much. Would if be better to take your 85 cents a day ($25/month) and buy a newspaper. I think not.
Learn about the Stock Market:
Don't fall for incompetent advice. We believe in reading; We believe even stronger in reading with a skeptical and commonsense attitude. Most of the advice I
read is "garbage." If you have read about stock investing, you have run across this statement: "Many beginning investors have no business investing in stocks." Huh?
Everyone Should Invest?
Let's assume you are a 65 year old beginning stock investor and have $100,000 (and that is every penny that you have), does the statement hold true? Well, I wouldn't put it all in a high-flying internet stock. If fact, it's probably hard to make a case for putting it all in any stock-related investment. But it seems pretty easy to justify putting 5% of it in blue-chip DRP stocks annually. The interest from a savings account covers a portion of that investment. Living to age 85 is common today and many live to age 100 or more. Investing $5,000 annually over a 20-year period (this investor would be age 85)
is worth something, if stocks do their 12% annually. And if this person is living at age 85, the potential value of the stock could be the difference between financial security and living in poverty.
Should you Invest as soon as you Start Earning Income?
Let's assume you are a 22 year old beginning stock investor and have nothing but a new career. Believe me, you have a lot. You have cash flow! Does the statement hold true for you? Of course not, it's absolute "garbage." Yes, do the prudent thing. Prepare a simple budget, but make sure the first item on the budget is investing for you --- for your future.
Why should it be first? If you invest for you from what is left over at the end of the month, there probably won't be any left over. And when you reach age 30, you will think about investing for the future again. And this feeling too often passes. So you reach 40, and your net worth is zip. Time to think about investing for your future... Well, you get the idea. Unless you make "investing for you, for your future" your #1 priority, you will always find ways to
consume your entire salary. The easiest time to do it right is when you get your first paycheck!
Being very conservative, we suggest this Simple Plan:
- Invest 5-10% of every paycheck in DRP Stocks.
- Select 5-7 blue-chip stocks and invest in them regularly. Do your own selecting. You learn and you develop the belief you need to stick with a program when the going gets tough.
- Learn as you invest. Study stocks regularly. Study the base material: annual reports, broker recommendations, earnings estimates, stock price charts, industry segment information, etc.
- Add to your stock portfolio occasionally, maybe one (1) new stock annually. If you own a real "dog" stock, sell it!
