When a person starts investing money at an early age, the result is that this individual is sure to have more money for payment of homeowners insurance premiums whenever the individual decides to purchase a house. In fact, starting an investment strategy at a young age can help a person to have $500,000 or even $1,000,000 by retirement age, even if the individual does not earn extremely high wages at a job.
Stock Market Volatility Can Lead to Insanity
Seasoned investors know that money grows over time, and they develop the habit of ignoring constant volatility of the stock market. Besides the fact that paying constant attention to the positive and negative whims of Wall Street can literally drive a person to the brink of insanity, ignoring daily stock market fluctuations helps a person to stay on track with an initial investment plan. Constant buying and selling of shares may reap rewards in the present, but eventually this type of investor may end up losing a substantial amount of money.
The Gentle Art of Investing Money is not a Game of Poker
Investing and gambling are not identical practices. At least, these two concepts used to be different. In today’s world of investing, the fact that many investors own computers makes it extremely easy for them to engage in daily trading of stocks and ETFs. The old adage of holding onto stocks and mutual funds for long periods does not appeal to many modern investors who prefer to take their profits and run for the hills. The problem is that once they sell shares, the gambling fever mentality persuades them to buy shares again on the following day. Since every investor makes mistakes, the likelihood of making a serious error is higher when a person persists in treating investing as though it is a poker game.
The Traditional Viewpoint about Investing
People who know about successful investing advise investors to start when they are young. A twenty-year-old man who starts investing money in a bond fund or equity fund that pays good dividends can add small amounts of money every week or each month. Forty-five years later, when the person is ready to retire, he or she is going to have a surprisingly high amount of money invested in these stocks or funds. Dividends keep reinvesting, and the person does not even need to do anything to earn these dividends. The money simply grows throughout the years. Another benefit that goes along with this type of investing is that the investor spends his or her time participating in meaningful and beneficial activities instead of spending every day reading stock market reports and comments from analysts.
Young Persons Need to Open Up Brokerage or Mutual Fund Accounts
In order to invest money in stocks, bonds or mutual funds over a long period of time, a young person first needs to establish a brokerage or mutual fund account. Opening an account is simple. Once the individual has an established account, he or she can research different investment options. The safest and wisest sway to invest money is to choose quality stocks or funds that pay good dividends. The next step is to add a little bit of extra money on a regular basis. A young person who sticks to this plan is sure to achieve extremely positive results in the future.
This article was written by Bill Johnson, who is the primary writer for homeownersinsurance-quotes.org, which specializes in home insurance rates and quotes.