It’s Never Too Late to Invest

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Is it ever too late?

Grandfather John didn’t start investing until he was in his late sixties. He sold his house and invested the money that he had left, after the sale, which totaled $75,000. Now, since he knew nothing about investing, other than putting his money in the bank to get interest, he got some advice from those who knew more than he did. Should he have started investing at a younger age? Absolutely! The sooner that you start to invest, the longer you have for your investments to compound through the compounding wealth factor. Grandfather John is now in his nineties and that original investment of $75,000 has recently grown to just over one million dollars. Now, at a time where he is starting to get hit with some different medical issues and unforeseen expenses, he can rest assured that he can at least afford those increased expenses.

What is the compounding wealth factor?

You have all likely heard about the magic of compounding interest where your money earns interest and then that money plus the interest earns more interest and so on. Well, the compound wealth factor is very much the same; except that instead of actual interest, your wealth continues to grow because your own parts of very well-run companies. As these companies continue to grow, so do their overall values continue to grow, and then their share price continues to grow, and as an owner of the company your wealth continues to grow. So, how do you know which companies to buy?

So how do you know which companies to buy?

Short of spending countless hours researching hundreds or even thousands of companies, there is no easy way to get the information on an individual basis that you need in order to invest with confidence. The reality is, that to do this on your own, you would have to do it as a full-time job and then you still might not get all the information that you need. Do you want to do this as a full-time job and if so, can you generate enough money to live on? Very few individuals invest for a living with no other means of income. Most people have their full-time job and invest with money that is saved from this full-time job. “There is nothing wrong with a ‘know nothing’ investor who realizes it. The problem is when you are a ‘know nothing’ investor but you think you know something” (Warren Buffett)

So what is another option?

An option for investing, without doing all of the work described above, is to get a reliable financial advisor working for you. A financial advisor has access to mountains of research done either by professional analysts that work for their company or in many cases done by either independent analysts or analysts that work in conjunction with other companies. A reliable financial advisor that is also a certified financial planner and their reputation should offer some security that they will put your wellbeing first. Their main objective should be to grow your wealth while limiting any risk that is beyond your risk tolerance.

So what if I don’t have a house to sell to get money to invest?

A different way of thinking is highlighted in a Warren Buffett quote which stated. “Do not save what is left after spending; instead spend what is left after saving.” So, what’s the plan? How do I do that? The best way is to enlist the help of a financial advisor and develop a financial plan. Part of that plan should involve a system of accumulating some money to invest. Develop a realistic plan with your financial advisor as to a level of saving that can be accomplished within your existing lifestyle. Each month save that amount first and develop a plan for living on whatever is left. Everyone spends money on things from time to time that are not really necessary. After you have a savings plan in place, you can move into an investment strategy. Obviously, the best time to invest is when the markets have tanked, and they have no other way to go but up. The second-best time to invest is when you have some money to invest. Whether you come into an unexpected windfall (selling a house and downsizing or are left an inheritance or win a lottery) or have simply saved money to invest, that’s the time to invest.

In a perfect world, you buy something when it is on sale!

If you go into a store and you see an item on sale that you had been considering buying but you thought was too expensive, you will often think, “oh wow, this is cheap“, and buy the item, because it is on sale. So, the best time to invest is after the market has had a downturn, when in theory, stocks are on sale. If you are investing for the long term however, the best time to invest is now, period. Investing on a regular basis (when you have money available) is more important than trying to guess a market bottom. Having your money in the market to allow for capital appreciation is one of the fundamentals of successful investing. Time in the market is more important than timing the market!!

So how do I do it right?

As mentioned earlier, a reliable financial advisor can be an important part of the overall plan when it comes to successful investing. A financial advisor can help keep you focused and committed through the ups and downs of the investing cycle (and there will be ups and downs, as there are ups and downs in every investing cycle).  They can help keep you on the right path on your journey to success. A financial advisor can enhance your opportunity for success by providing you with up to date timely information on investment options that suit your individual situation. Because they have access to this information, it saves you time and work and they actually do the heavy lifting when it comes to the information gathering that is needed to be successful. It is a scary time right now with the different perceptions of where the world is headed, but it is because of this that some tremendous opportunities have emerged in the investing universe. Now and in the near future is an opportunity like we have never seen before. In the current environment it is more important than ever to enlist someone with the appropriate knowledge and temperament to help guide you and help you find your right path to success!! “If each of us hires people who are smaller than we are, we shall become a company of dwarfs. But, if each of us hires people who are bigger than we are, we shall become a company of giants.”  (Warren Buffett) What this Buffett quote can pertain to in the world of investing, is enlisting the help of a professional who is knowledgeable, reliable, trustworthy, and ethical. You want a financial partner; someone who will put you first. You want to be a survivor, not a casualty. General George Patton once said, “It’s an honor to die for your country; make sure the other guy gets the honor.”

The first paragraph of this article is based on a real-life scenario.