Ramit Sethi — host of Netflix’s “How To Get Rich,” New York Times bestselling author, and host of the “I Will Teach You To Be Rich” podcast — recently explained to CNBC that what you do with even a small amount of money from a young age can make a huge difference.
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A CNBC poll indicated that 63% of young adults believe the stock market is a great place to build wealth and invest, but many are not participating. Nearly two-thirds of younger generations aren’t investing yet, which can limit the ability to build wealth in the long run.
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Start Investing As Soon As Possible
Opening an investment account and investing from a young age gives you access to one of the most successful wealth-building strategies that exists today. Many brokerage accounts don’t have any fees or monthly minimums required to invest.
If you started investing just $10 per week five years ago, with an average annualized 10% return, you’d have a lot more money today. If you were investing $20 or $50 per week, the results would be even more impressive. Here’s the breakdown:
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If You Invested $10 Per Week
After one year, you’ll have $546; after five years, you’ll have $3,334; after 10 years, you’ll have $8,703.
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If You Invested $20 Per Week
After one year, you’ll have $1,092; after five years, you’ll have $6,668; after 10 years, you’ll have $17,406.
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If You Invested $50 Per Week
After one year, you’ll have $2,730; after five years, you’ll have $16,670; after 10 years, you’ll have $43,516.
It’s worth noting that these figures do not take into account any annual inflation.
Don’t Make Excuses To Not Invest
Sethi explains that while most people have financial limitations, they will never get rich simply because they have poor money habits.
Here are some excuses that people make to avoid investing, according to Sethi:
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“Investing In Stocks Is Overwhelming”
Anything new can be overwhelming before you do it. But, purchasing your first stocks is how to get over this fear. Once you start investing, you’ll likely see your money grow in the long term.
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“I Don’t Want To Buy Stocks When They’re At Their Peak”
There’s this idea of “timing the market” so that you don’t purchase shares at their most expensive. However, this strategy doesn’t usually result in the best financial returns. It’s smarter to purchase shares at their current value and hold them despite potential market ups and downs.
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“There Are Many Ways To Invest and Stocks Make Me Uncomfortable”
Investments can increase in value, or decrease. Other investments such as real estate can have upside potential, but getting started with stocks has a lower barrier to entry. Giving up a sense of control can certainly be uncomfortable. However, relinquishing control by taking the investment plunge and entering the stock market will likely grow your wealth.
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“I Don’t Want To Lose Money I Worked Hard For”
Some people have a sense that if they hold onto their money, at least they won’t lose it. But the reality is that each day you hold onto cash rather than invest it, it’s losing value due to inflation. Keeping your money in the market is a long-term hedge against inflation. If you’re unwilling to take risks, this will likely result in little to no financial gain.
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“I Don’t Want To Pay Fees To Invest”
There’s a misconception that investing automatically means paying fees. However, that’s not always the case. Many trading platforms allow you to buy and sell stocks for no fees at all.
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This article originally appeared on GOBankingRates.com: I’m a Self-Made Millionaire: Why Ramit Sethi Says First $20 You Invest May Be Most Important
