Learn This Investing Lesson, And You'll Have the Key to Success
The one thing I wish I could shout from the top of a mountain is that investing doesn't have to be hard. To be a successful investor, the main things you need are time and consistency. It doesn't take perfectly timing the stock market; it doesn't take Apple-like (NASDAQ: AAPL) returns (its stock price is up well over 150,000% since its December 1980 IPO); it doesn't take spending hours reading daily financial statements. It just takes time and consistency.
Compounding is either your worst enemy in finance or your best friend. When it comes to debt, compound interest can add insult to injury and add to your totals. In investing, compounding occurs when the returns you earn on your investments begin to earn a return themselves. It's you putting your money to work, and then your money continuing to put itself to work. It's hard to reach $1 million strictly by saving; you need to invest it and let compounding work its magic. It's how most people build their wealth.
Albert Einstein is reputed to have called compound interest the "Eighth Wonder of the World." It's certainly a powerful force. Once you realize the power of compound interest in investing, you'll begin to see how expensive it is to put off investing. The only right time to begin investing is the present time.
Source Fool.com
