When is the best time to start investing?

The best time to invest was 10 years ago; the second best time is now.

After 17 years as an investment writer for USA Today Matt Krantz is joining a money management firm. Mr. Krantz shares his top lesson for investing:

“If you want to make money on stocks, stop ob­sess­ing about minu­tiae. Get started. In­vest, di­ver­sify and hold on.” Mr. Krantz continues: “It’s easy to fix­ate on de­tails like choos­ing which stock to buy, which in­vest­ment ac­counts to open and fees. But in­vestors get so bogged down with de­tails they of­ten make the big mis­take — they sit out the mar­ket.”

Waiting it out actually costs you money. Let’s consider the example of Mary and James. Mary starts investing at the age of 25 and James waits until he is 34 years old:

Name: Mary
Age: 25
Invests: $2,000 each year
Invests for: 10 years
Total amount invested: $20,000
At 10% growth, at the age of 65 her investment will be worth: $556,197

Name: James
Age: 34
Invests: $2,000 each year
Invests for: 30 years
Total amount invested: $60,000
At 10% growth, at the age of 65 his investment will be worth: $328,988

Even though James invested three times more than Mary, at the age of 65 he will have $227,209 less than Mary. Mary started investing early giving her money more time to compound.

I started my SI Report last year and the January 2016 issue listed 5 top US stocks and 5 top Canadian stocks, stocks which I identified as undervalued and quality stocks (according to my 12 Rules of Simply Investing). 15 months later the 10 stocks have returned 32.6% including dividends. Those who waited on the sidelines missed an opportunity to grow their money by 32.6%.

Stock prices will go up and down, but quality companies will continue to increase their dividends. Remember the best time to invest was 10 years ago; the second best time is now.