How a Non-Rich Person Started Investing, and Why You Should Start, Too

How a Lazy, Non-Rich Person Started Investing

When I was young, everything I knew about investing I learned from TV. This was how you invested: You call guys in suits to buy a stock, and then they go to the trading floor and yell that order as loud as they can, and somehow the money lands in your account and you become a millionaire.

Then you also had to be the “type” of person to invest: the rich person type. I knew all about rich people because I watched The Fresh Prince of Bel-Air all the time. One of the characters, Uncle Phil, went to Princeton, then Harvard Law, and now he’s a lawyer with a full-time butler in tow. Uncle Phil was definitely the type who invested his money.

Investing was not for people like my mom, who worked at a factory inspecting car parts. No, she wanted to keep her money exactly where she could see it. At that drab local bank down the street, earning 1% interest.

As much as I loved and admired my mom, I didn’t want to be like her financially. She had saving down to a science, but she didn’t have the know-how for making that money grow.

Can any of you relate? Like when you call your parents all proud that you opened a 401k and Roth IRA, and then they respond like this:

“Why did you do that? You can just use Social Security! Don’t save for retirement, that’s silly.”

I dug up that gem from my Gchat history. This is something that my friend’s dad actually told her!

So when it came to figuring out how to be wealthy, I didn’t want to be like my mom. I wanted to be like Uncle Phil.

But if school doesn’t teach you this stuff…and you don’t have financially literate parents to help you…then what?

We can fumble our way through it, and still end up OK. Yes, even something as scary and seemingly complex as investing.

The Path to “Rich Mofo” Status

When you don’t have knowledge, sometimes all it takes is a vague goal and the persistence to see it through.

I didn’t think to read any investing books. Or to ask HR to help me understand my options. Or to hand over money for an Uncle Phil type to invest for me.

But here’s what I did think about: my investing goals.

Although I’ll admit, my goals were pretty lazy: I wanted to do better than earning 1% in a savings account, I didn’t want to do a ton of research, and I didn’t want to spend more than a few hours per year actually dealing with my accounts. Oh yeah, and one other small detail–I wanted a million dollars by the time I was 60.

Aside from my uninspired goals, the other thing I had going for me was wanting to do Future Me a solid.

It’s kind of embarrassing, but here’s what I emailed to a friend right before I contributed to my first 401k:

Haha, I naively thought I was going to max out my 401k on a $33k salary. That would have taken half of my paycheck!

Maybe the laser-sharp strategy wasn’t there yet, but the vision was. Even then I had designs on how I wanted to be with money: living frugally in the present to be a “rich mofo” later. It’s like stepping over a penny because you know you’ll come across a dollar later.

All I had to do was take that first step. For me, that first step was contributing to my company’s 401k plan. I knew a 401k was for “retirement savings” because I’d seen my mom’s paperwork lying around at home, and I had heard from a coworker that you could get “free money” with it. The first day I was eligible, I printed out all the investment options and brought the packet home to study like I knew what I was doing. That was eight years ago, and now I’ve gotten greedy and own every type of investment account imaginable.

After years in the market, I’ve learned a couple things along the way:

  • Investing is so much easier than you think. I spend a couple hours per year managing my investments, and that’s it.
  • Investing is the ultimate source of passive income. It can feel like printing dollar bills. I make money when I’m sleeping, when I’m hanging out with my friends, when I’m brushing my teeth.
  • You don’t need to be an Uncle Phil in order to do it. You can start with $100. Although you do need to annihilate credit card debt and have some sort of emergency fund savings set aside first.

But my favorite lesson was this:
Investing is how ordinary people like you and me can become wealthy. If you’ve ever wondered how someone has a baller net worth, it’s probably because they invest. Wealthy people don’t save their way to riches. They put their money to work.

But still, how exactly does one get over how intimidating investing is? S&P, ETFs, IRAs…the acronyms are endless and it feels like there’s so much to learn. I read a lot of articles about investing to research this post, and let me tell you, most of them triggered the MEGO effect (My Eyes Glazed Over). So the last thing I want to do is to try to help people but then end up scrambling their brains instead.

I want to do it right.

For that reason, I’m going to start with one concept at a time. First thing’s first: I have to make you WANT to invest.

An Example of How Much I’ve Made Investing

Everybody tells you need to invest, but then they use a hypothetical example based off a small amount that doesn’t seem that impressive. Like, “if you invest $1,000 and you get 6% returns, you’ll make an extra $60!”

If you tried to wake me up with that news, sorry, but I would have just rolled over and covered my ears with my pillow.

I’ll take it a step further and show you some of my real returns, so you can see what can happen with a more substantial amount of money and a decent amount of time. I’ve been investing for eight years, and here’s how one of my accounts has grown:

Example investment returns

If you don’t know what’s going on in the chart, don’t worry, I’ll explain.

The chart says that I contributed a total of $116,258 over time, and I’ve made $72,927 in returns.

$72,927!!!

Add those two together and the total value of my account is $189,186, as of last week. On average, I’ve made 10.6% in returns. That’s a heck of a lot more than 1.5% interest in a savings account.

If you look closely, there was a brief time in 2010 where I lost money, but I did nothing, the stock market rebounded, and for the most part the money has grown. All I have done is just dump money into the account, and then go about my normal life. There were some years where I didn’t contribute any money at all. And now I’m about $73,000 richer.

Investing Fears and Ignorance Can Set You Back

I’m showing you this chart, because I wish somebody showed me something like this when I was in college. My friend told me I should open a Roth IRA account, but I wish she explained it differently to me, because I did NOT follow through with opening that Roth IRA account. Maybe if she showed me what type of results I could get I wouldn’t have missed out on years of returns. “You need to invest” isn’t compelling enough, but real numbers talk.

The prospect of being old didn’t motivate me to get better with money.
But knowing I’m missing out on making money with very little work? Now I’m listening.

Instead of acting right away I sat on the investing sidelines for a few years because I didn’t understand what it was or why I should be doing it. Or, what I was missing by NOT doing it.

Next, I had to get over how risky investing seemed when I didn’t really know what I was doing. Would I lose all my money? After all, Mom always said putting money into stocks was like going to Vegas, recklessly throwing down some chips, and ‘flushing your money down the toilet’. To make it more anxiety-inducing, it’s like you’re at the blackjack table when you’ve never even played before.

Instead of focusing on the negative, I decided to focus on the positive. There were three specific ideas that helped me get over my fears.

Motivation #1: Cash in a Savings Account Is Actually Losing Money

This motivation was easy: I didn’t want my extra money in a savings account earning 1% interest!

I was at a point where I had no credit card debt, my student loan repayments were moving along just fine, and my savings account kept building up with no real purpose for the money.

Most of us who aren’t investing probably keep our money in a savings account. It’s not a perfect comparison, but here’s what would have happened if I put that $116,258.86 in a savings account at 1.55% interest:

After eight years, that money would have grown to $131,599. That means I would be $57,587.59 poorer right now.

For simplicity’s sake, I haven’t included the fees you pay to invest. But what would you do for an extra $50,000+?

If you want to play around with different numbers to see how your money could grow, check out this calculator.

So for me, making a crappy investment decision was most likely going to be a better bet than earning 1.5% in a savings account. Of course you want to have SOME cash in a savings account. Having access to cash in case of an emergency is worth the measly interest rates. But once you have an emergency fund that you feel good about, it’s worth thinking about whether overfunding your savings account is the right strategy for you.

Motivation #2: The Importance of Investing in Your 20s

Then I came across some charts that blew my mind. They said if you invested early and then never again then you’d have MORE money than someone who invested a larger amount later. Example:

Let’s compare someone who starts investing at 25, contributing $3,600 annually for 11 years, to someone who starts investing at 35, contributing that same amount for 31 years. Here’s how each of their accounts grow year after year, assuming 7% in returns.

Investing at 25 versus 35

The emojis don’t lie. The 25 year old smokes the 35 year old in terms of results. Here’s a summary:Investing at 25 versus 35

At 65, the person who started at 25 has $462,813. And the person who started ten years later, at 35, has only $393,185. By waiting 10 years to start, the 35-year-old missed out on about $70,000. But wait, the 35-year-old contributed almost THREE TIMES the amount of money, and for 20 more years. How could that be?

That’s the beauty of compounding, which means you earn money not just on your contributions, but on your returns, too. And the longer you have your money invested, the more potential you have to compound that money. That’s why it’s so important to start early.

Since I started doing the adult thing late, I needed to get cracking ASAP, and I was willing to front-load as much money as I could so I take advantage of time in the market.

Motivation #3: The Sweet Rewards for Playing the Long Game

I’ll be honest: when you first start investing, it’s not that exciting. It’s a slog at first, contributing small amounts of money and seeing tiny returns, but you have to remember: Investing is about the long game.

I cribbed this chart from my friend Zach’s blog, Four Pillar Freedom, which shows how long it can take to accumulate a million dollars. Notice how it takes about 7 years to get that first 100k. Now see how it takes only 5 years for the next 100k, then 3 years for the next. That’s a result of the compounding effect and how you get to that stage where it feels like you’re printing out money.

How long it takes to get to a million dollars

For a real-life example, here’s how long it’s taken me to reach each 100k milestone so far:

  • 100k: 7 years
  • 200k: 2.5 years
  • 300k: 1 year

That first seven years? Kind of a drag, but I kept shoveling money into my account no matter if the market was up or down. The more money you invest, the quicker it can snowball. I know that can be maddening to hear, because having an amount like $10,000 to invest sounds laughable to some of you right now. But remember I started with $0 and a low-ish salary ($33k), too. I was able to invest as much as I did by living below my means, taking advantage of every 401k company match, and investing all my raises. As your salaries scale up, so can your investment contributions. By taking the long view, I could see that investing my money was a much smarter strategy for me than using it to inflate my lifestyle.

Starting Is More Important Than Knowing Everything

My first 401k was riddled with sub-optimal choices: The fees were too high, the funds were vetted by past performance and star ratings I didn’t understand. Because funds are rated like restaurants on Yelp, right?

I never looked at my account until I heard coworkers complaining about all the money they lost because of the recession. Curious about my own portfolio, I logged in and saw a surprising number staring back at me. It was way, way higher than what I had actually contributed. That’s when I realized two things:

  1. If everybody else is losing money in the recession and I’m not, then I must have done something very, very wrong.
  2. Hey, this investing thing seems to be working somehow.

Even if the 401k wasn’t perfect, it was a gateway to other financial tools to grow my money even further. Like a Roth IRA. And a Traditional IRA. And then a taxable brokerage account.

And yes, my investing strategy has vastly improved since.

How did you get over your fear of investing? Were you lucky enough to have someone help you, or did you jump in like me? Do you regret not starting earlier?

Feature Image: Union Los Angeles

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  • Dave @ Married with Money

    I don’t think I ever actually was afraid of investing…I just underestimated it. Or rather, I overestimated how easy it’d be to save enough money later. Once I graduated I was better off and knew that doing just the company match wasn’t going to cut it, but I still didn’t focus on maxing my 401(k) until lately.

    I’ve got the saving part down really well, but the investing part is relatively new to me, all things considered. I wish I’d followed this advice years ago…but I’m happy for the awesome times I’ve had in the meantime and still feel comfortable that I’ll be retired in my 40’s or early 50’s. So not really all that bad.

    • Overestimating how easy it is to save money later is a really common prob! Plus, too often we don’t really understand the longterm benefits of investing.

      I don’t think maxing out 401ks is for everyone necessarily, but I like reducing my taxes. If I were trying to buy a house, though, I’d prob shuffle that money elsewhere.

      Yeah, I hear you–there are so many ‘shoulda, coulda, wouldas,’ for me, too, but I wouldn’t trade early 20s Luxe for anything. And early 40s and 50s is impressive for retiring still!

  • Emily

    I love this so much! Already shared with two friends who are reluctant to dive in and have waaaay too much money in savings and gathering dust. Thanks for summing up everything I’ve thought for the past few years into one great post!

    • Hey Emily,

      Yay, thank you! I tried to write the article that I think I would have responded to in my early 20s. Hope it works on your friends 🙂 And I feel you on the sadness of friends with overly large savings accounts.

  • I feel like I’m a mix of you and your mom – I have a fear of investing money because I can’t “see” it, but I also know I’m losing money by not investing it and letting it grow. I really appreciate your blog and your voice – you explain things in an easy to understand manner without talking down to your audience. Partner that with the fact that I’m about in the same boat as you when you started investing (similar salary, no debt, emergency savings in place), and I really have no excuse not to. Thanks for putting me on the right track – I plan to open my Roth IRA by the end of February!

    • Yeah, I think with investing there’s a lot of uncertainty, but you can start with a small amount so it feels less risky. And thank you! Investing can be such a dry topic, so I really tried to make it more narrative style so it was a little more engaging.

      I’m SO excited you’re going to open a Roth! A+ move.

  • GYM

    Man Disqus lost my comment while logging in- I’ll try again 🙂

    I have a post coming up too about how my parents invested haha! You have some amazing returns- 10% annualized, that’s great! My friends and family are so scared of investing, but the DCA approach is easy and makes it less scary.

    PS I love Fresh Prince! Will Smith has an Instagram account and I feel like it’s just like watching new fresh prince episodes haha

    • I’m getting back at you for all the comments I tried to leave on your blog before that got eaten by the Internet :p But weird, because I’ve never had probs with Disqus. Maybe because I never log out of it.

      Oooh, can’t wait to read the parents post! I still remember how it felt when I saw my mom’s 401k was invested in money market funds and had barely grown. I think my heart shattered in a million pieces. The missed opportunity due to ignorance just made me so sad.

      10% annualized–yes not bad! Although I wish it was like the 2017 returns! We’ll see what it’s like over a span of 30 years, though. Prob will be like 6-7%, unless I’m an investing genius. Agree the DCA set it and forget it approach is the least stressful.

      Girl, researching GIFs for this I fell into the rabbit hole of Fresh Prince websites. I had no idea there were some serious storylines, like Carlton taking drugs and having a gun! I need to follow Will on Insta!

  • Great article! I started investing in 2014 back when I was making $30k. Although my salary has increased since then and I’ve been able to dump more money into the market, the original money I invested has definitely grown the most, given the market trends! What motivated me was random clicking on the internet and finding the world of personal finance blogs.

    I would love to know more about your investing strategy. You mentioned being scared of stocks, but did you end up going for stocks, or for a more diversified vehicle like index funds?

    • Thank you! It’s awesome you too were able to invest on a lower salary. PF blogs are so great like that. But I guess the trick is finding the ones you can trust. There’s a lot of questionable stuff out there.

      I’ll have to write another article about my strategy, but it’s not too exciting. Except the one time I lost $1000. Now that would be an interesting article. I have a mix of index funds and I also own individual stocks for fun. It took me a long time to work up to buying stocks.

  • I loved this quote.. “When you don’t have knowledge, sometimes all it takes is a vague goal and the persistence to see it through.” I feel like this is what’s carried me through any accomplishment I’ve had in life – investment/savings, financial literacy, blogging, my career, love life… etc LOL You summarized my life!!

    I started around 7 years ago too, with my 401K. I started it because I “heard it was the right thing to do” (see again… a vague sense of persistence) and looking back, I am so grateful for the unknown source that influenced me to do it! Otherwise I would’ve lost out on the years of compounding in my 20’s as one of the charts in your post clearly illustrated. I forwarded this article to all my younger siblings/cousins. Thank you for writing this post…. the world needs more of this.

    Jessica || Cubicle Chic
    http://www.mycubiclechic.com

    • Yeah, that’s basically been my life quote, too. My mom worked a lot, so my sister and I kind of raised ourselves. If we waited for things to happen, well then, we’d be waiting a long time. I remember we found some roller skates in the basement (parents weren’t home) that were five sizes too big. We put them on anyway, tied the laces real tight, and skated around the house. I’m really good on all kinds of wheels now (ice skates, roller blades, etc.).

      So glad that unknown source motivated you to invest, and thank you for forwarding! I hope your younger family members follow through 🙂

      Thanks for reading, Jessica!

  • Valley Mommy

    Ugh. True about the parents’ lack of financial knowledge. I never heard of investing as a kid, whereas my husband’s first investment account was opened when he was a year old. His grandparents opened one for each grandchild their birth year. My in laws are setting up an account for my son this year.

    This is a nice reminder that I need to set up an investment account! We have various retirement accounts but I’ve been iffy about opening just a brokerage account (if that’s what you call it, I have no idea tbh). No idea why, other than that I’m brain dead these days. Anyway, I have been putting it off and losing money!

    • I feel your frustration. I didn’t know what other parents did until I dated someone who had a 47k nest egg as a 25-year-old. His parents had put in 10k when he was a baby and just let it ride. Things like that really highlight the differences between different social classes. But now that you’re a mom and know what’s up, you can break the cycle!

      I had a brokerage account already because it was a requirement to get the high yield Charles Schwab checking account. I never put any money in it though until later. Now I use it for after-tax investments.

  • I never understood much about investing during my 20s. I had a 401k for a brief period at a call center job, but as soon as I left, I withdrew the small amount that I had contributed. I know…I cringe at myself whenever I think about it. Then I had a TSP while in the military, and I contributed the smallest amount I could because I wanted to keep as much of my paycheck as possible. Last year I stumbled upon a Facebook group called Bottom Up Wealth that breaks down investing into normal people terms.

    It really opened my eyes to how investing can be a powerful tool in building wealth for those that weren’t born rich. I opened a Roth IRA, made contributions, learned how to purchase stocks the “right” way, and I can already see painless (and lucrative) it actually is.

    • Yeah, I pretty much thought day trading = investing! Like, ppl sat at the computer tracking stocks all day and selling/buying them. Sigh. So naive.

      If you withdrew a small amount, the penalty isn’t that bad. And I think not contributing to a 401k because of smaller paychecks is super common. Especially if your paychecks are small to begin with, it can feel silly to save for the future when you can use the money now.

      So glad you found a community that helps break down the investing barriers. And congrats on that Roth IRA!

  • V

    I was never afraid. But I found the vast amount of things to consider/learn very overwhelming. Heck, I am still learning, to this day. Just this week I found out that the 2017 contribution deadline for IRAs and HSAs, for instance, is 4/15/2018 (I asked a tax attorney and someone from HR and they both incorrectly said 2017 contributions were by calendar year). So if you are expecting a bonus and did not yet max out 2017 contribution limits.. I suggest looking into it.

    I definitely regretted not starting earlier … but honestly, I started as early as I could, given my circumstances. As soon as my employer offered a 401k plan, the first thing I did was contribute enough to max out out the employer match. But when my employer offered a funded HSA option (they put some money every pay period in there), I chose that and all year did not put my own funds — that was a mistake.

    One thing I will be sure to pass on to my children is that you can open an IRA ROTH at any age. As soon as they start earning income, I will encourage them to start contributing there. Remember, google is your best friend. There are a wealth of solid personal finance information out there. Lots of sifting, reading, re-reading will be required if you don’t have a business/finance background like me, but it can be done!

    • It’s definitely comforting to hear that someone with a biz/finance background doesn’t have it all figure out, either! Although it’s a little disconcerting that the tax attorney gave you the wrong info! I think that’s one challenge of seeking out advice. You never really know who to trust or who knows what they’re talking about. And with financial literacy being pretty low as a whole, it’s easy to get taken advantage of. But yeah, the deadline timing is a neat trick. My husband doesn’t have an IRA so I think we’ll contribute for both 2017 and 2018 soon.

      Weird that your HSA let you set it up without contributing your own money! I think I had to set up an amount when I chose the HSA as an option.

      Yes to the Roth IRAs as early as possible! One of my financial regrets is I wish I knew that was an option for me in college. I think back on all the silly, inconsequential things I bought and how I could have started making my money working for me by investing. Hindsight is 20/20, right?

      Thanks so much for reading and commenting!

      Thanks for chiming in!

  • Erin @ Reaching for FI

    Haha I remember getting the 401(k) information and the list of funds I could invest in at my first job and taking it home to study like I was going to get a pop quiz on it! I know I split my teensy contributions (seriously, a year and a half there and my 8% contributions plus the 10% match I got after the first year added up to about $4.5k when I rolled it over after I left) between two things. I know one of them was a targeted date fund but I can’t remember what the other was. I want to say it was more or less an S&P 500 fund, so go me if it actually was.

    These days I’ve read lots about investing, especially JL Collins’ stock series and it’s index funds all the way for me! I also just bumped up my 401(k) contribution to 20% and would love to increase that even more if I decide in a month or two once I finish paying off credit card debt that I can afford it. I’d also love to focus more on my fairly-neglected Roth IRA account this year, too.

    All that is to say that this is an excellent post, Luxe!

    • Sounds like you and me had the same idea. Although I had no idea how to actually “study” what I was looking at. Oops. Wow, 10% match is GREAT. The most I’ve ever had is 6%, and I thought that was generous.

      The JL Collins site is so great, although I need to read his book. Have you read it? And yesss to index funds. Did your HR lady question you about the 401k contribution increase? Mine did. I was contributing 25% once, and she said, “Are you sure? No one here contributes that much.” And then she said, “Well, good for you!” Too bad those 401k fund options sucked, though. I love my little Roth IRA! That was the first account I opened by myself and I feel attached to it now.

  • Thank you for writing this! I just opened up my first ETF account with Vanguard and I’m completely overwhelmed. But I think in your 20s it’s important to get started and learn as you go. You have time on your side and, as you’ve expertly shown here, prioritizing investments in your youth has a huge impact on lifetime wealth.

    • I think people have been wondering why I haven’t written about investing yet, so I figured this was a nice intro. There are still so many things to talk about!!! Congrats on your first ETF account. Even though there are a ton of options, at least you have a lot more control over your portfolio versus a 401k. Yeah, it’s insane how the simple act of starting early makes such a huge difference!

  • I took some investing courses before ever having money which was really helpful. I started investing as soon as I could.

    Do I wish I had saved more? Sure do! Knowing the power of compound interest was a motivator to save and invest. I was doing great compared to “average.” I just wish I was reading blog posts about 50%-75% savings rates 10 years ago. It would have been eye opening.

    • Investing courses? What an overachiever 😉

      Oh god, I came across savings rates around 2012-ish, and that definitely lit a fire under me to the possibilities of retiring early. If only MMM was blogging earlier, ha!

  • Accidental FIRE

    I was never afraid, but my parents situation was similar to yours. Except my Mom didn’t have saving down very well, we just didn’t have much at the end of the month to save. But what little she did save went into the local bank savings account. Stocks were for the upper class, they were inaccessible.

    We’re so blessed to live in the internet age with unlimited access to information and mentoring.

    • Hey AF!

      Thankfully, future generations (like you and me) don’t have to follow our parents’ footsteps. And we get to spread financial literacy by writing blogs.

      We are indeed blessed to live in the internet age, but also kind of cursed. There’s so much info out there (good and bad), you’re not sure who to trust or where to start.

  • Allison C.

    I’m sold. Help me, Luxe! Where do I even start? I’m a teacher and some money is taken out automatically for mandatory retirement savings… but I don’t know what else or what next.

    • Hi Allison,

      Appreciate the enthusiastic reply! Patience, grasshopper 🙂 I’ll be writing a little more on what accounts I have, etc. within the next few months. What you do next depends on your goals (retirement, saving for a house/vacation, etc.), so definitely start thinking about those first.

      Thanks for stopping by!

  • Mrs. Farmhouse Finance

    This is so great! The emojis don’t lie 😉 I was very lucky to get good financial advice from my mom. She was the one that pushed me to join the state retirement system when I was a 20 year old camp counselor who wasn’t even thinking about my first real job, let alone retirement. That meant I got into the system in an earlier tier, and will benefit from that when I retire from teaching. She also was the one that encouraged me to open a Roth IRA.

    • Hi Mrs. FF,

      So awesome you have parents who helped you out! Although I’m not sure if I would have listened to my parents, anyway 😉 I wish I would have known I could have opened a Roth IRA in college–who knows where I’d be now if I had the knowledge I have now back then.

  • After I paid off all my debt, I started to save a lot but just threw it in both a savings and CD accounts at my credit union. It wasn’t getting much of a return(0.75% for savings and 1.1% for the CD from what I recall). I’ve always knew about investing but was timid on how to start. So I applied myself to understand more about it, I took an investing class at a local community class, read a few books and online articles and next thing you know I’m allocating my 401K account. I actually knew what I was doing because before, I just threw in money into my 401K without any knowledge of what I was doing. Now after having all this investing knowledge I have an idea to what percentage I should invest in a certain fund, the fee percentages, dividend payouts, and of course compounding.
    I did all this in my early 30s but kind of regret not applying myself to learn about investing in my 20s. I would have had greater returns but its all good now because I know the power of compounding and is a great motivator.

    • Hi Kris,

      I would not have even thought about taking investing classes–I would assumed it would be way over my head. So it’s really cool you did that. I remember when I put together my first 401k, that when I got stuck at a certain point, I’d just Google it! Like, “Asset allocation for X age.” It worked well enough at the time, just to get started. I think we all wish we had started earlier, but at least in your 30s you’re presumably making more money and can shovel a lot more money into investments to catch up.

  • Very helpful post. Would love to hear more about how you chose an account and all the little details that come after. Looking forward to your future posts about this topic. Thank you!!!

    • Hey! Yeah, investing is a bit of a doozy topic, so I’ll definitely be writing more posts about how I chose accounts, etc. But I thought I’d start by explaining why investing is important. I actually don’t think that’s explained nearly enough. Glad you found this helpful!

  • This was fun to read! I have similar motivations now but I’ll have to get off my butt and see what investment options are out there in my own part of the world this year. No 401k or Roth for sure, but there must be something better than that dreaded 1%!

    • Thanks, Daisy! The words ‘fun’ + ‘investing’? I’ll take it! Yeah, I wish I knew more about finances for the non-US folks so I could help you all out, but I’m sure you definitely have other options besides the sad savings account. I believe in you!

  • I already told you this but this was a really helpful post and I am feeling so inspired-as always! I’ve always had a million question marks around investing since my parents also believed in holding onto their money. But having my money make money is something I can get behind 🙂 Rich is something I never even thought could be possible for someone like me but I honestly feel like this has helped me understand how it can be more of a reality than a daydream 😉

    • Hi Sophie!

      Glad to see you are inspired by something as dull-sounding as investing! But anyway, I felt like the benefits were never really explained, and the more people knew about investing, the more people would do it. And I love how investing can be an equalizer, especially those like you and me who come from low-income families. I’m so pleased to see that you have hope that being rich can be a reality! Sometimes I feel like just believing in something is like, getting halfway there.

  • Mr. Groovy

    That one chart showing your 8-year investment returns from one account says it all. Why aren’t they teaching this shit in schools? Why do we have to stumble upon great blogs like yours to learn it? Last year, the first full year of our retirement, our portfolio returned $192K. A hundred and ninety-two thousand dollars for sitting on our asses! We would have never seen a return like that had saved our money in a bank. Investing + time = freedom. Thanks for spreading the word, TS. Perhaps one day the majority of young people wouldn’t be learning about money their ignorant family, friends, and neighbors.

    • OK, so I think I should erase my post and just copy/paste your comment in! You basically nailed it in much fewer words 🙂 It still seems unreal how money is made by sitting on our butts, but once I saw results, I’m never stopping. The stock market is down right now and I’m not scared, I’m just going to buy more stocks!!!

      I think the more we talk about this, the better off everyone will be. And I’m definitely noticing more schools and colleges starting to add PF to their curriculum, so that’s encouraging!

  • Fantastic post! I love that you break down the barriers of why investing seems intimidating at first and then talking about the simplicity. We hear that it’s important, but those charts and $ amounts really hammer home that point. I also love how you talk about starting being more important than knowing everything. I think a lot of people tell themselves, “I’ll learn about money later” or “I’ll invest after I’ve learned more.” Getting started is the most important part because it gets the ball rolling from there!

    • Thank you, Matt! I guess I wanted to show that you can make mistakes and not know everything about investing…but still end up OK. And I wish I saw real charts when I was younger–I would have been so much more motivated to do something about it, instead of like, “Yeah, if you invest now you’ll vaguely be able to retire sometime…” Oh, and totally agree about the “later” mentality–it seems so pervasive in our culture. “I’ll pay that bill later.” “I’ll think about money later.” The point is, it’s never too late…but it’s a million times easier the earlier you start. If I ever have a kid, he/she is going to be investing at age 0, haha.

  • Allie Cleve

    Absolutely love reading about investing! It feels like such a far off thing for most people, even though it really shouldn’t be. I have about 6000€ in investments right now, which isn’t a lot but it makes me about 400€ a year by doing absolutely nothing! After I’ve finished paying off my car debt to my dad I want to save to invest more again because it is simply the best way of putting your money to work and actually seeing significant growth in your net worth!

    • People and companies make investing seem hard so that you’ll pay them to manage your money for you! It’s really a sham. And $6k is nothing to sneeze at–that’s awesome. That’s $400 you wouldn’t be passively making otherwise. Paying off that car debt will be like getting a raise, and what better way to use that raise money than invest?

  • OperationHusbandRescue

    Thanks for making this investing thing just a little bit easier to understand! I dabbled with investing a while ago and eventually quit because it was just way too confusing for me, but I am looking to get back into it once I build up some funds. Articles like these ones really help for those of us who are starting with zero knowledge.
    You mentioned them not teaching this stuff in school. They really, really need to. I DON’T need to know how to sew a pillow but I DO need to know how to invest a paycheck!

    • You know, I had an economics class once, and I was horrible at it. I kept using the wrong spoon to bake things. But thankfully, I learned how to sew on my own by just buying a sewing machine and following the instructions. Kind of the same way I started investing!

      Yeah, I feel like we could all do a better job at demystifying investing so it’s not quite as intimidating. It’s awesome you’re going to jump into investing again. Good luck with that!

      Thank you for stopping by!

  • Being too scared to get started cost me a lot. My dad helped me open a Roth IRA when I was in my teens (I owe my parents so much!), but it sat in a CD until I was 28. Barf. Amazingly detailed post!

    • Yay for woke parents! I cringe at all the dumb stuff I spent my summer job money on when I could have been investing. 28 is still really young!

  • Steph

    Loved this post! Will you be doing a follow up post on different investment strategies? i.e. Saving for retirement vs. investing in index funds

    • Hey Steph,

      Glad you enjoyed this post! I will be doing follow up posts, but man, there’s so much to talk about when it comes to investing. It would be easier for me to write an overall guide than write little blog posts, because it would be a LOT of blog posts to cover everything. Plus, people are all at different levels with investing, so people new to it will need more info. So the answer is, YES? If you e-mail me your specific problem, I can probably help you more easily and quickly that way. hi@theluxestrategist.com

      -Luxe

  • Trying to think back on what I was so mad about a week ago when I couldn’t comment….oh right, my hubby! I’m not really mad mad 🙂 Our disagreement on if we should or should not invest was just something that happened. His fears of investing makes really good sense because that’s his personality. His carefulness and precision is good for a lot of things but the rumblings of the stock market is not for those with anxiety. Good thing he got super duper lucky with stocks and the prize cow that is Amazon.

    The first $100k is the hardest! If I never met Jared, my projections (from savings from old jobs) it would have taken me 5-8 years to reach $100k net worth. Those would have been some serious hustler years. You just wear those 7 years with pride! Self made woman! ^_^

    • Do you watch The Good Place? There’s this character, Chidi, who is the sweetest guy but so indecisive. Anyway, I was watching, and I was like, ohh, is he like Lily’s Jared??? How warped are we now that we think about our online friends’ lives!?

      Yeah, thankfully, I wasn’t too obsessed with my net worth, because I would have been impatient as hell about saving the $100k. Oh, trust me, there’s a reason why I like to keep my money in a separate bucket from my husband’s. I like to know EXACTLY how much of it is money I earned and invested.