It’s Never Too Early to Start Investing—Even Without a Clear Timeline – Morgan Stanley Smith Barney

Money is powerful because of what it can do for us—the goals it can help us achieve, like buying a house or raising a family or saving for retirement. But sometimes people are reluctant to invest because they aren’t sure when they want to buy that home, or start a family, or go on that round-the-world vacation.
Often, it still makes sense to invest your extra cash once you’ve built up an emergency fund to cover unexpected expenses, even if you don’t have clear timelines in mind. Here are a few top reasons why:
Reason 1: Cash is not king
While interest rates on savings accounts have finally started to increase after years of being stuck below 1%1, savings accounts still do not return more than inflation. That means your savings may be losing value over time.
So even if you don’t know yet exactly what you’ll use your funds for (maybe you’ll start a business eventually . . . maybe you’ll build up a big enough portfolio to produce supplementary income), it’s worth investing sooner than later. (Just keep in mind that with potentially greater rewards comes potentially greater risk.)
Reason 2: Time is on your side
Setting aside even small amounts can create a large fund over time, thanks to the magic of compound interest. That means the sooner you can start investing for long-term goals like retirement, the easier it will be to achieve those targets.
Reason 3: You’re more likely to have money when you do need it
Let’s say you start investing $350 a month without a clear goal in mind. A few years in, you begin dating someone and fall in love. The two of you decide to get married, but you haven’t explicitly been saving money for a wedding. Many people would have to start from scratch to save up the roughly $30,000 average cost of an American wedding.
But not you: After seven years of regularly setting aside those monthly contributions, you could have more than enough to throw your own wedding, aside from planning for your future marital bliss.
Reason 4: Over time, your portfolio might create its own income
If your portfolio grows large enough, it might generate enough investing returns to serve as an income stream in its own right. This doesn’t necessarily mean earning enough to kick back and quit your day job (though for some extremely wealthy folks, it might mean that), but a supplementary source of income can be a buffer against job loss, unexpected expenses or impromptu splurges.
At the end of the day, even if you don’t know precisely what your investing goal will be, it’s worth starting now so you’ll have the freedom to potentially meet whatever the future holds.
Article by Morgan Stanley and provided courtesy of Morgan Stanley Financial Advisor. Brian P. Jacobs is a wealth advisor and executive director in Valencia, CA at Morgan Stanley Smith Barney LLC (“Morgan Stanley”). He can be reached by email at brian.jacobs@morganstanley.com or by telephone at (661)290-2022
Brian Jacobs may only transact business, follow-up with individualized responses, or render personalized investment advice for compensation, in states where he is registered or excluded or exempted from registration.
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