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The reason why 55% of Americans do not invest – The Motley Fool

Investing your money is the best way to grow them for a larger sum. In fact, if you do not invest in the long term, you risk getting short in retirement and struggling during your golden years.

Unfortunately, many working Americans today have invested their money and for several reasons. For some, there is fear of losing. For others it feels that they do not know how. But in a new survey from GOBankingRates, the reason why 55% of Americans do not invest is nothing to believe they have no money to do. And even though it's an understandable feeling, it doesn't hold water either.

  Man looking at bar graph on laptop screen


It's OK to Start Small

Many people think it's a minimum amount of cash they need to retrieve to start investing, and that number must be significant. In reality, you can start by contributing as little as $ 50 to an IRA or 401 (k) and investing your money there. You can also open a traditional broker account without tax benefits and invest small amounts as they become available. The choice is yours, even though there are tax benefits by saving in a dedicated pension plan, but do not think for a moment that if you only have a small amount, it is not worth investing.

Let's imagine you only have $ 50 a month to invest. The following table shows how much fortune you can accumulate by investing that sum over time:

Invest $ 50 a month over many years …

And you want this much wealth (assuming an average annual yield of 7%) …


$ 38,000


$ 57,000


$ 83,000


$ 120,000


] $ 171,000

Data source: author.

Now it's cool with those numbers: To settle with $ 171,000 in our example, you just need to deposit $ 27,000 of your own money. That means you're looking at a $ 144,000 win, and that's all because you put your money to work for you.

Furthermore, the return of 7% used above is a couple of percentage points below the stock market average. If you upload on stocks, you will probably do well or better provided you are able to keep your money invested for 10 years or more. And even if it is OK to buy individual stocks, you can fall back on index funds instead if you are intimidated by the prospects or are not willing to do research. When you buy index funds, you effectively buy a bucket of shares as opposed to individual. And because index funds are managed passively (they only track existing market indices, such as S&P 500), they don't charge much in fees.

This is important when it comes to investing in retirement savings, especially in a 401 (k). Some 401 (k) plans offer limited investment choices, so if you're stuck with just a couple of dozen funds, you can choose index funds over actively managed mutual funds to save you a bunch of fees during your investments.

The more money you can invest for your future, the better – but that doesn't mean you shouldn't give yourself an investment if you're limited in cash. You can easily fund an IRA or 401 (k) with as little as $ 50 a month and grow a significant amount of wealth over time. Furthermore, there are a number of brokerage firms and investment apps that allow you to set up an account with no minimum. Dig around and see which choices are available to you, because the sooner you can start investing, the better.

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