Most people don’t think about investing until retirement is already on the horizon. By that time, many of the opportunities to build a successful financial portfolio have already passed. This article will discuss three main reasons investing early is crucial to reaching financial goals. 

Compound Interest
Compound interest can be tricky in that it heavily penalizes individuals who do not understand how it works. While most college graduates look at buying new cars, they don’t understand that the interest they pay will compound over the life of the loan. On the other hand, a deposit into a mutual fund, Roth IRA, or IRA will grow interest, and interest on the interest. Unfortunately, compound interest needs time to work. Many don’t realize how compound interest can work in their favor soon enough to maximize its potential. Taking an active role in understanding compound interest early on can make a huge difference overall.

Diversify
It is generally common knowledge that a well rounded financial portfolio is diversified. 
When investors diversify early, they benefit from more opportunities to sculpt investments. Early on, an investor has more opportunity to balance risk and reward. Additionally, a diversified portfolio is more secure over time. With many types of investments, if one fails, others will likely still grow. 

Bull and Bear Markets
Historically, the economy regularly shifts from a Bull to Bear Market. Whether new investors find themselves in an economy on the rise or fall, investing early can help safeguard against times with a declining economy. Indexes may go up or down every year, but the S&P 500, over the rolling 10 year periods, is only positive. An investment with more time to grow will be more valuable through time. 

Overall, when it comes to investments, earlier the better. That’s not to say it’s ever too late to start. The most important idea to take away is, start investing today. While some investments will be better than others, time is a major factor in the success of a financial portfolio.

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​What are my investment options beyond stocks?
 
Other than stocks you have options, bonds, futures and real estate.
 
We will give you’re a overview of these here and go into each in more detail in future articles.
 
Options are a contract on a set number of shares of stock. Say a lot of 100. These contracts mainly give you two options bet on a stock to go up or down. You buy a call when you think the stock will go up and a put when you expect it to go down.
 
Futures are a contract betting on the price increase of a commodity, say you think oil will go up five dollars or gold will go up fifty dollars. You but a contract on this price increase as long your right you make money.
 
Bonds are the debt of a company, depending on the company’s financials and credit rating you will get more or less interest. A bond rated below B grade is considered a junk bond because the chances are you will never get your money back.
 
Real estate is buying a physical or digital property. Physical property is a house, apartment building or some commercial location. Digital real estate is buying domain’s or website and flipping them for a profit.
 
This should give you a better idea now of what your investment options are.

​The Basics Of Investing In The Stock Market
 
You have a little money, you keep some in a jar, maybe you want to add more to the jar one day. That’s where we come in. ( Yes I am quoting the Wedding Singer) Love that movie. At Broth Investing we believe knowing how to be smart with money can be life changing. We became financial experts with a lot of blood, sweat and tears, It’s our superpower and we want to share it with you.
 
 
How to get started investing in the stock market.
Buy a small cap or mid cap index fund, learn how to analyze individual companies, pray and just chuck money at something.
 
These are your three main options. For most people buying an index fund with a low-cost structure is enough. You want this to always be less than .5% . If you want to learn how to analyze companies and build your portfolio we will teach you in future articles.
 
In the meantime, your like small cap, midcap are these types of mushrooms? I’m too sober for this please explain.
 
A small cap is a company worth between 50 million and 1 billion, these companies have a bit more risk but offer higher investment rewards.
 
A mid cap is a company with a value of over 1 billion but less than 30 billion, anything above that is a large cap and your investment returns could be more modest.
 
We don’t think blindly chucking money at something without researching it is a good idea so option 3 is not something we would recommend.
 
In our next article we will start to teach you how to analyze companies for investment and how to build your financial future.
 
We will also talk about other investment vehicles beyond stocks but one thing at a time.