Investing

Being a Successful Investor Boils Down to These Three Principles

Stacy Rapacon

With all the jargon, analysis and daily price fluctuations, investing can seem like an impossibly complex endeavor. But it doesn’t have to be. You can keep your investing style sweet and simple and still stand a greater chance of achieving your financial goals than if you’d stayed on the sidelines or tried to beat the market with active trading.

It all boils down to these three principles:

1. Invest early.

When you’re young, it may seem like there are more immediate financial priorities—like paying off credit card and student loan debt—than investing. But waiting to invest can cost you. It’s crucial to do all you can to make even just a little room for it in your budget. That’s because you have one key advantage when it comes to investing: time. Thanks to compounding returns (when your investment returns start generating their own returns and so on), money invested early can grow exponentially over time.

Consider the numbers: Let’s say you want to have $1 million by age 65. If you start with just $100 at 55, you’d need to invest almost $5,800 a month to achieve your goal (assuming a 7-percent average rate of return). With an extra 10 years to invest, you could drop that to about $1,900 a month. Giving yourself another 10 years and starting at age 35, you’d need to invest just over $800 to reach your goal in time. But start at 25, and you only need $380 per month in order to hit $1 million by 65!

2. Invest often.

Stretching your budget to start investing early can help take some pressure off your future self, even affording you the flexibility to put a pause on saving at some points along the way. That’s because the amount you accumulate can keep working for you even if you need to take a break from saving. But you’ll be even better off with consistency.

Again, look at the math: If you spend 10 years investing $100 a month in a mix of stocks, you wind up with about $17,500, given an average 7-percent annual return. Without adding another cent, that amount would grow to more than $140,000 over the next 30 years. But if you can keep up saving that $100 a month for the duration, your savings would stretch to more than $260,000.

3. Stick with it.

Once you develop these good habits and devise a strategy for how to reach your goals, stay the course. Plenty of headlines—the president’s latest tweet, another interest rate hike or something else altogether—can push the market one way or the other in the short term. But in the long run, historically, the market has always headed up. If you’re properly diversified with a broad mix of stocks and bonds, you should be well-prepared to ride out all the bumps you’re bound to experience along the way.

acorns+cnbcacorns cnbc

Join Acorns

GET STARTED

About Us

Learn More

Follow Us

All investments involve risk, including loss of principal. The contents presented herein are provided for general investment education and informational purposes only and do not constitute an offer to sell or a solicitation to buy any specific securities or engage in any particular investment strategy. Acorns is not engaged in rendering any tax, legal, or accounting advice. Please consult with a qualified professional for this type of advice.

Any references to past performance, regarding financial markets or otherwise, do not indicate or guarantee future results. Forward-looking statements, including without limitations investment outcomes and projections, are hypothetical and educational in nature. The results of any hypothetical projections can and may differ from actual investment results had the strategies been deployed in actual securities accounts. It is not possible to invest directly in an index.

Advisory services offered by Acorns Advisers, LLC (“Acorns Advisers”), an investment adviser registered with the U.S. Securities and Exchange Commission (“SEC”). Brokerage and custody services are provided to clients of Acorns Advisers by Acorns Securities, LLC (“Acorns Securities”), a broker-dealer registered with the SEC and a member of the Financial Industry Regulatory Authority, Inc. (“FINRA”) and the Securities Investor Protection Corporation (“SIPC”). Acorns Pay, LLC (“Acorns Pay”) manages Acorns’s demand deposit and other banking products in partnership with Lincoln Savings Bank, a bank chartered under the laws of Iowa and member FDIC. Acorns Advisers, Acorns Securities, and Acorns Pay are subsidiaries of Acorns Grow Incorporated (collectively “Acorns”). “Acorns,” the Acorns logo and “Invest the Change” are registered trademarks of Acorns Grow Incorporated. Copyright © 2019 Acorns and/or its affiliates.

NBC Universal and Comcast Ventures are investors in Acorns Grow Incorporated.