I firmly believe that life is for living, at the moment, right now.
However, we all know that we SHOULD be doing something smart with our money, other than spending it. These very thoughts can lead to guilt and shame in the lifestyle we lead. And because many of us feel that there has to be a choice between living our life, or saving and investing, that we need to give something up today to have what we desire tomorrow, it stops us in our tracks.
I know, I have been there even as a financial expert!
Maybe it is the belief that ‘investing is hard and not for me’ that leads many of us to give up at the first hurdle being ‘the very thought of starting an investment'.
I often hear ‘I don’t have ENOUGH to invest.’
But what is enough?
Think about it. Every time you get a new client or a pay rise, you spend more. Your lifestyle costs you more. You rent a nicer flat, upgrade to Tesco’s finest, or upgrade to Waitrose!
You will never feel that you have enough to start investing.
The best time to start is usually right now, with whatever you can and making that investment a priority. By taking some inspired action to start you are giving yourself permission to spend the money you don’t invest in the present moment, it really is a win-win.
What you need to have in place to start an investment
An emergency fund – you should have enough in savings, a good amount is 3 months of expenses in accessible savings account so that if you do an emergency you don’t need to access your investments to fund that emergency. Accessing your investment for an emergency means you are at risk of needing to sell when your investment has suffered a loss.
Paid off high-cost debt – you should always prioritise paying off high-interest loans and credit cards before you start an investment. If you are paying say 29% interest on debt, your investment is unlikely to outperform this.
You do not need to save up to start an investment
Saving up will cost you in the long run, because if you save up in cash, the value of your money will likely diminish in real value to the impact of inflation, which as of March 2022 hit 7%*.
Imagine (annually compounding of interest and returns, with inflation at 2%):
You save up £100 a month in savings earning 1% interest, in 5 years’ time your £6,000 saved would be worth £5,854 in real terms.
You invest £100 a month and achieve 5% investment returns, in 5 years' time your £6,000 saved would be worth £6,458 in real terms.
A caveat, this is not a stock market prediction, it is purely for demonstration purposes.
By keeping your spare money in cash you are leaking your wealth each and every day. Cash is not king in the long term, it will not protect your wealth from the rising cost of living.
Whatever you have spare can and should be invested.
Remember you worked really hard to earn every £1 that hits your bank account. You’ve given up your time and you have likely paid tax. So knowing where every £1 goes after you have made it is really important.
You can start an investment with just £1
If you don’t believe you have enough to commit, start with what you do have, even if it is just £1. It means that £1 is working as hard as it can for you and you are forming new healthy habits that are teaching your brain that you can hold on to your money, without giving anything up in the present moment.
Over time as we focus on where our money goes we can plug the leaks in our spending habits and we find the space to start investing even more, as our confidence in investing grows.
It is not the amount you invest it is the habit you are forming
Even if you have £1 you can start. Value all the money you make and your investment can pay dividends in the long run.
Just imagine how fulfilling your life can become, and how much time you can have back if your money works as hard as you do?
Not sure where to start?
Join my 3-week live no nonsense jargon free investment course.
Introduce you to the world of investing and;
Show you how to set up your first investment in 5 simple steps!
Hosted by me, Vouched For top rated financial coach and chartered financial planner.
Click here to enroll! Enrolment closes on the 19 May 2022 with the course starting at the end of May, the week commencing 30 May 2022.