Is investing actually worthwhile?

[Mada_]

I see things like Crypto are really popular, and all my directors at work have stocks. Is investing actually worthwhile? 

[Yarco]

If you have thousands of dollars sitting in your bank account at any given time and not earning any interest, then yes.

If you have to struggle to invest a little bit into crypto or stocks every paycheck, then probably not. You'd be better off buying a home if you currently rent (in most places), or invest in yourself (learn a new skill, take online courses), or start a business. 

Investing is a good way to get an extra 5 - 10% per year on any extra money that you have laying around and hopefully meet or exceed inflation to maintain your purchasing power as the dollar loses value. 

It's also pretty much necessary in one way or another if you hope to ever retire. Although so few people can afford to buy a home or invest now, that I feel like either the government is going to have to bail out our generation, or we're all going to be living in squalor when we're older.

 

Edited June 23, 2021 by Yarco

[Average Investor]

Compound interest is really powerful. Most people are just looking mindlessly for the next thing to get rich. If you are disciplined and continually add money in a tax advantaged account it is very powerful for your later years. 

https://www.investor.gov/financial-tools-calculators/calculators/compound-interest-calculator

For me I am not super wealthy or anything. My income is pretty weak at the moment. However, at the start of the pandemic I was able to scrounge up a couple thousand bucks to invest into the stock market in a roth ira. I managed to more than double that money. I am spreading it out into large index funds and solid vetted investments. 

So for me I am 25 years old. I plan to invest for at least 40 years, but the taxes will come at 59 1/2. Let's say I am only able to contribute $60 a month, which is really on the low side. I have a base amount of about $6,000 invested now. So if I get between 8-12% interest a year on that I will have $316,000 to 1,100,000 at age 65 depending on my interest rate. Of course I want to contribute more than that, but that is super powerful. That is literally only $720 per year for 40 years. $60 is what people spend on their phone bill usually. If I can up that to $300+ in the near future it will have a dramatic difference. Taxes towards the end will take off a good bit more though too. However, most of that will be made tax free. 

Of course it might not pan out either. Basically, I would be risking $28,800 (not including base amount) to potentially 10x or more.

It's something you cannot ignore, but I would not recommend sucking all of your time into it. Read several good books on the topic. Set up the accounts to get started. Then add funding monthly and check on the portfolio each quarter. 

[Pav]

Without a doubt if you have any sizable amount of money you don't want to keep it in a bank account. The interest rates are so low now that you'll be rapidly losing your money to inflation (which is about 7 to 15% per year).

Crypto can certainly be very lucrative but you have to do your research first and understand what your getting in to. You'll also want to learn when the right time to get in is so as to avoid being a fomo buyer who gets in at the peak of the cycle. And of course, just like any investment/trade you have to accept the risk and assess whether the risk/reward is right for you and your current life situation.

[Eph75]

You can't predict crypto so you have to be aware the money can be gone tomorrow. That applies as a good mindset with stocks in general but with crypto in particular. 

As said compound interest is very powerful and you don't have to have a lot of money to make a difference, it's time that is key. If you are young and start from 0, and you can set aside some money every month (10%+ saving on you salary recommended) into some diversified stock ETFs or index funds such as S&P 500, possibly some individual  stocks and even some percentage of crypty (5% typically recommended) to be even more so diversified, that compounding over the next 40 years will build a small fortune, looking at a dividend of an average of 8% per year.

With luck the upside is larger. 

This image shows how powerful time in the market and compound interest is. Of course you shouldn't stop after a few years, just keep at it, and increase saving as your salary increases rather than increasing you spending.