Investing for Beginners #1 – Why you need to start TODAY

strat investing today

Welcome Cheapskates, to the first in a series of articles we’ve put together to help get you started in investing! The good news is, if you’re here, you’ve already made it over the first hurdle! Congratulations! You’ve already made a conscious decision that you’d like to accumulate wealth. The vast majority of people never make it past this hurdle. They think that getting a good education, getting a good paying job, buying a car and a house, working your way up the corporate ladder so you can earn more to buy bigger and nicer things and then retire at 70 (or whatever age the government decide) with a mediocre life is success. This isn’t our definition of success and we’re not going to settle for it!

As always, the following is not financial advice, read our disclaimer

Why the poor and middle class stay broke – and why the rich invest

Robert Kiyosaki’s book ‘Rich Dad Poor Dad’ (if you haven’t read it, we think its a fantastic book for anyone interested in improving their financial situation) explains it best;

“The Wealthy Buy Assets, the Poor Buy Liabilities, and the Middle Class Buy Liabilities Believing They Are Assets

Robert Kiyosaki

In basic terms, an asset is something that brings you money, a liability is something that takes money away from you. So in the above example of a person getting a good education and climbing the corporate ladder, all they are really doing is trying to earn more money to keep up with their ever increasing liabilities. Is a car an asset or a liability? It has value yes, but it’s depreciating every day and more than likely there’s loan payments to make on it, let alone the cost of running it. So a liability by our account. Is a house an asset or a liability? Most people would consider their house as their biggest asset. But is it making you money? It might be increasing in value on paper, but you still need somewhere to live so unless you’re prepared to sell it, it ends up just costing you money – in other words, a liability. Truthfully, the poor and middle class don’t really have any true assets. The only method they have of making money is their job, which could be taken away in a heartbeat by Mr Boss Man and they can’t afford to save any of this money due to their liabilities!

In contrast, the wealthy, instead of spending their money on materialistic things, spend their money on things that will make them more money, whether that’s real estate, starting a side business or building an investment portfolio. Of course, they still have homes, still drive, still wear clothes, but you’ll find that you’re average millionaire has a pretty modest lifestyle. The key difference is their priorities are structured differently. All purchases have intent and all things have a purpose. Are the rich investing because they are wealthy? or are they wealthy because they invest?

So, you want to lower your liabilities and increase your assets right? Right! There’s lots of ways to increase your assets (articles of which you can find right on this site!). However, this series talks about investing and specifically investing in stocks, shares and commodities. We believe that investing teaches so many lessons that you can apply to to other asset building tools and these days, has a low barrier to entry. And there’s no better time than today. No really, we mean TODAY


Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn’t, pays it.

Albert Einstein (purportedly)

So why start literally today? Ok it doesn’t have to be literally today but the sooner you start the better. This is because the most powerful tool an investor can have is TIME. The power of your investments grows exponentially over time, so the earlier you invest, the more time your investments have to capitalise on this effect. In the earlier years, its hard to see this benefit, but in the later years, returns can really start to fly. Albert Einstein understood this concept. In his quote above, he states that compounding interest is the 8th wonder! To illustrate this better, we’ve used the following example of investing £500 per month at a rate of 8% return, which we feel is more than achievable:

1 year15 years30 years
Interest earned£256£79889£528806
Check that pot size after 30 years!!!

As you can see, after 1 year, we’ve earned a respectable, but measly £256 – can’t quit work yet. After 15 years, we’re starting to get somewhere. After putting 90k in, we’ve earned almost 80k in interest, soon we will have doubled the money we put in. However, after 30 years and investing £180k, the total pot size is over £708k! Almost quadruple the amount invested. We’ve been investing for 30 years, but have multiple our 1st year pot by 113 times! That’s the magic of compounding. 15 years is where the interest starts to takeover, and toward 30 it really is snowballing (for reference, 40 years would put you at an astounding 2.5 million). Of course, if you can invest for longer, put away more cash every month or get a greater return than 8% (we talk about these later in the series), we can reach even bigger goals even sooner. For reference, I’m currently investing £1400 per month. Doing this for just 22 years at a rate of just 8% would put me at almost 1M – nice.

Oh, I should probably say at this point, if you were hoping that this was going to be a series explaining how you can become a billionaire in a matter of years learning some sort of stock market insider tips and sectrets – you’d be mistaken. We’re all about, what we believe to be, tried and tested methods of growing your wealth and gaining financial freedom.

Let’s begin

So, hopefully any second thoughts you had about staying in the rat race have now been quashed and you’re ready to hear more! Great! Because in the next article, we tell you to….. slow down? OK, not slow down, but before we start throwing money at the stock market, there’s some key things we absolutely must do before making that first investment. Click onto the next post to find out what they are.

Next Up…

Thanks for reading! Click on ‘next post’ below for the next instalment of Investing for beginners!

Let us know your thoughts by leaving a comment below!

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