Many people mistakenly assume that investing money and building wealth is a complex game that’s entirely out of their grasp. While you can make your investing process complex, we do not recommend it because utilizing a simple strategy serves just as well.

No matter if you are beginning to invest for the first time or have been in the story for decades, you can build your net worth over time practicing simple principles and habits. In this article, we will cover tips to reach your long-term financial goals no matter your age or the amount of money you have to invest.

One of the essential factors in how much wealth you are able to accumulate depends on the age you start investing. There is no better example of how the proverbial early bird gets them worm than with investing money.

Starting early enables your capital to compound and grow exponentially over time — even if you do not have much to invest.

Compare these two investors, Maria and Jeffrey, who set aside the equal amount of money each month and get the same average annual return on their investments:

Maria

Jeffrey

Because Jeffrey has a 10-year head start, he has 400,000 USD more to spend in retirement than Maria! But the difference in the amount Jeffrey invested was only 24,000 USD (200 USD x 12 months x 10 years)

So try to start investing as early as possible. It is a colossal error to believe that you do not earn enough to invest now and plan to catch up later. If you wait for an eventual raise or bonus, you are spending precious time.

Skipping to invest even tiny amounts today will cost you in the long run. The earlier you start saving and investing, the more financial security and wealth you will have in the future. Please remember that you are never too young to start mapping for your future.

Because it’s so easy to procrastinate saving and investing, the best strategy is to automate it. This is a simple, but tried and tested, way to build wealth.

Automation functions because it assumes that you could easily go off the economic rails and be tempted to spend money that you should not.

To be successful, you must be pragmatic about ways you could slip up and then design solutions that force you to maintain good habits.

For example, have money automatically shifted from your paycheck or bank account into a savings or investment account every single month. When you set up regular automatic deposits, you put money aside before you are able to see it or get tempted to spend it. It is a limit you set up that enables you to outsmart yourself, so you control money wisely.

Putting your financial future on autopilot is genuinely the best way to make your life easier and slowly get rich.

Though we tend to utilize the terms saving and investing interchangeably, they are far from being the same thing. Savings is cash you keep ready for unexpected emergencies or short-term planned purchases.

For instance, if you are saving money to buy a car within a year or two, keep it completely safe in a high-yield bank account. You should also save for unexpected expenses for things you cannot function normally, such as the fridge.

A common question is whether you should invest your savings since typical interests banks give are very low. The answer is almost always no.

The purpose of savings is not to risk it, but to preserve it so you can tap it in an instant if you need it.

Investments are the opposite of savings because they are meant to grow money that you can spend in the distant future, namely in retirement.

Investing is also best for smaller goals you want to accomplish in at least five years, such as buying a home or taking a dream vacation.

Historically, a diversified stock portfolio has been able to earn you an average of 10% per year.

Start investing a minimum of 10% to 15% of your gross income for retirement. Yes, that is in addition to the 10% for emergency savings.

Consider these amounts monthly commitments to yourself, same as a bill with a due date.

If saving and investing at least 20% of your gross income seems like more than you can afford, start tracking your spending carefully and categorizing it. When you see precisely how you are spending money, you will find opportunities to save more.

The key to developing capital is to start saving and investing as much as you can as early as possible. But there is no shame in starting small.

Even putting away just $20 a month is better than nothing. And if you are starting late, do not stress about it — just get motivated to start right away.

Setting up your accounts and automating investments is a powerful step in the right direction. Years from now, when you have got savings and investments to fall back on or to support the lifestyle of your dreams, you will be so glad that you took control of your financial future.