Planning for your future
The future might sometimes seem like it’s a long way away. And it can be hard to imagine what your life will look like in 10, 20, or 30 years’ time. But when it comes to investing, it’s worth thinking about your future self today.
Let’s take a look at the impact of investing now, building a regular investing habit, and how you can shape your money for years to come.
Start small
Right now, you might only be able to afford (or feel comfortable) investing $5 or $10 a week. That’s okay! It might not be the case forever.
Putting aside even a little bit regularly helps you to build your investing habit. And as your income grows, you could choose to increase the amount you invest.
Build up over time
Compound returns happen when you invest for a period of time, and your initial investment gains value for at least two comparative time periods in a row.
For example, let’s say you bought some shares for $100. After a year, they grow in value by 10%, so now they’re worth $110. In the next year, they grow in value by a further 10%. This 10% is 10% of $110, which means they’re now worth $121.
Reinvesting dividends is another way to generate compound returns. Say your $100 worth of shares doesn’t increase in value, but you reinvest a $2 dividend you were issued. You still managed to increase the value of your investment without contributing more of your own money.
Over time, these returns can add up. But keep in mind that they could also fall in value from year to year.
When will you need the money?
Consider the impact your time horizon has on your risk appetite. If you’re a relatively young person investing, your time horizon might be quite long.
For example, let’s say you’re 30 now. You have years to regularly put money aside each week—and ride out the ups and downs of the share market—before you even start to consider retiring. It doesn’t have to be a large amount each week, either!
So while your time horizon may change the level of risk you’re willing to take on, ultimately what you choose to invest in is up to you.
Today’s decision, tomorrow’s future
The decisions you make today may have a huge impact on how comfortable (or not) you end up being in years to come. Even if it might feel too soon to be thinking about your future, it'll be here before you know it.
Building an investing habit now (by regularly investing) could help you out in the long run. Do it for future you!
Ok, now for the legal bit
Investing involves risk. You aren’t guaranteed to make money, and you might lose the money you start with. We don’t provide personalised advice or recommendations. Any information we provide is general only and current at the time written. You should consider seeking independent legal, financial, taxation or other advice when considering whether an investment is appropriate for your objectives, financial situation or needs.
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