In This Turbulent Market, Is It Too Late to Start Investing Now?

After sitting on the sidelines for even just a little while—say the past few years because you were just starting out in life, the pandemic had you sitting at home worried, your income was down or non-existent, or you just were afraid of the stock market in general, whatever the reason—you missed the boat. That great “boom” investment market has left the shore and maybe it is going to be sailing away for quite a long time, who really knows. Many in the financial world think it may have left for a good long time and if it has, does that mean that it’s too late to start investing now?

Dollar bills and pocket watch representing whether it is too late to start investing now

Investing Is a “Loooooooong” Game

Unlike an actual game, investing has no real timeline whereas a game has a beginning, a middle, and an end. The only meaningful timeline investing can have is for someone who needs their money in their hand right now for some real purpose like an emergency that requires all cash on deck. Hopefully that will never happen to you, but sometimes it does. If you are in a situation like that, investing money isn’t available to you right now.

But if you are even thinking about investing (even in a “down” market or a highly suspect market like the one we seem to be facing right now), you must first assess how you’re doing financially at this moment before you do anything like investing.

Most people don’t have a clear idea of how they are managing their finances. That often leads to incorrect assumptions about their financial health and that spells trouble ahead! But, thank goodness, there are some things you can do to accurately assess your financial health before you make big financial decisions like making investments.

How to Decide Whether to Start Investing Now

Step 1: Do a Financial Health Assessment

The first step is to sit down and do a financial assessment. It requires you to calculate your net worth, cash flow, and debt obligations. Knowing these numbers will help determine how your income is being spent and lead to allocating money that supports your investing goals, if there is any to do it with.

The assessment is about understanding your annual income, monthly expenses, sources of income, and the amount of your emergency funds needed to reach your ultimate goal.

A huge question to ask yourself is: “Do I have a retirement plan in place and have I begun to prepare for it no matter when I actually plan to retire?”

Once you determine that you actually have some money you can invest, it’s time to do it for real. And if you don’t have money to invest yet, there are things you can do to make that happen.

Step 2: Define Your Investment Goals

This may sound fairly simple, but it isn’t. Your goal is to make money, of course. But this is not exactly like every other way to do it.

Many people think that investing is like a day out at the casino, you park a few dollars on a stock and spin the wheel hoping that you get lucky and win. They don’t actually have a long-term horizon, which is actually the practical way to invest. Time is your friend in investing so that the longer your time horizon or need for the money is, the better off you will be.

Why do you need specific goals? You need to have a goal or goals and define them in terms of purpose and timeline. If there is a rule to use that would be the one as I see it. It’s a motivational thing you can use and it helps to make your decisions with thought and not impulse.

Caution: Now there are those out there who think that buying and selling stocks is a like a job. A trader makes decisions every day or even by the hour in order to catch a stock on the rise today that may drop tomorrow. It’s sort of like they view stock trading like surfing: ride the wave and get out before you wipe out! That’s dangerous on a wave or in the market and no one is that smart to be able to get it right. My advice is don’t do that…ever!

Step 3: Take Action

A lot of people reach their mid-30s and 40s and have a moment where they realize they probably should have started investing earlier and started to build up some funds for their retirement as a goal. While it’s always beneficial to allow investments to compound over as many years as possible, all is not lost for those who have put investing on the back-burner until now.

If you haven’t started yet, by the time you are age 30, have a job, and a plan about what you want out of life, then investing fits into that plan well. It’s very common to start investing in your 30s and this leaves more than enough time to get a regular investing system in place and allow your portfolio to grow over a number of decades. Again, time is your best friend here. If you start investing in your 30s, you’re in a great position to have retirement funds, build wealth, and achieve financial freedom in your life.

Is It Weird to Think About Retirement When You Are 30 or 40?

Every financial advisor I know says the same thing about investing: Start investing young and the younger you are, the better off you will be. But what happens if you are older when the light bulb goes on and you decide to invest?

While starting to invest when you’re younger does give you the advantage of time, it’s never too late to start investing. Most people are concerned that they won’t be financially secure in retirement so that means now is always a good time to start.

What If You’re in Your 50s Already?

Ideally, we would all start investing for retirement earlier in our lives, but sometimes we don’t get the wake-up call until we’re in our 50s. But it is never too late to start investing. You just need to accelerate your investments, and perhaps stick with more conservative mutual funds. Be sure to take advantage of catch-up contributions to your retirement funds.

Retirement Is the Number One Goal When Investing

Miscalculating how much money you’ll need in your retirement could lead to real consequences for you. At a young age, this subject is one you almost never even think about. But as you age and get nearer to your retirement, it becomes a big presence in your money calculations. Can you live on your Social Security benefits alone? Probably not. You need alternative sources of income. That usually means savings and assets and yes, investments.

Downsizing and Life Changes Funded by Your Investments

People usually choose to downsize their lives in retirement in many ways. They don’t need as big a house or as many cars and other things like that as they did when working full-time and raising a family.

But you may find that you have to live on less, a tighter budget or even having to go back to work when you don’t want to or worse, are unable to due to health reasons. And since people are living longer than ever, miscalculating your retirement expenses and money resources could be life altering. That’s the number one reason you should plan and execute as many ways as you can to supplement retirement income. Investing now is a prime way to do it.

Related Posts
A Beginner’s Guide on How to Invest in the Stock Market
How to Start Investing Without a Lot of Money

Final Thoughts

If you haven’t figured out my conclusion here, you aren’t paying attention. It is never too late to start investing.

It’s actually not that complicated, especially if you have access to a defined contribution plan at work, like a 401(k) or a 403(b) through your employer.

These types of plans offer at least one distinct benefit and one potential benefit. First, the money you contribute to a defined contribution plan is done so on a pre-tax basis, meaning your annual tax liability is reduced. Second, if your employer provides matching contributions, that is free money. Why would anyone pass up free money?

If you don’t have access to such a plan, you can seek professional help or even use self-directed investments on your own after some due diligence and research.

It’s not too late to start investing, but the bottom line here is that you not only should invest now, you need to invest now. Caution being a watchword in a turbulent market, yes, but investing in a retirement at the very least from your employer with matching funds thrown in? That is a no-brainer.

Wouldn’t you like to see that money grows over 10, 20, and 40 or 50 years? Are you afraid of the stock market and investing right now? Have you considered it? What is your plan to build wealth and retirement? Do you have one?

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