Intimidated by Investing? Do It Systematically

The words "Systematic Investment Plan SIP" appeared drawn in ink on the cover of a spiral notebook surrounded by writing implements an binder clips on a blue tabletop.
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A lot in life can scare us. I may just be getting old, but that feels truer today than just a few years ago. You, no doubt, have your own set of fears -- you know, the ones that bring a queasy feeling, even pain, to the pit of your stomach.

Based on quite a few financial conversations I've had over the years, one issue, in particular, strikes fear into the hearts of many: investing. Though I don't think it should be a fear generator, I regularly see and hear from folks who are filled with trepidation at the thought of doing it.

One way to ease those fears is to do it systematically. Here's why:

1. It's Easy

Whether you're signing up to contribute to a 401(k) plan, signing up for (or just not opting out of!) the military's Thrift Savings Plan (TSP) or setting up automatic investments into an individual retirement account (IRA), to get the ball rolling typically takes only a few keystrokes or taps on your phone. I'd bet you're less than 15 minutes from getting started. Now that's not very scary at all.

2. It's All-Purpose

Sure, I love the idea of building your retirement nest egg or funding the kids' college through systematic investing. But there's also systematic saving, and it can be a great way to accumulate cash for your emergency fund, holiday shopping or next year's vacation. Whether it's long-term investing or short-term saving, doing it systematically is truly all-purpose, and getting the job done will leave you with a warm and fuzzy feeling.

3. It Takes Timing Out of the Equation

"Is now a good time to invest?" That's a question I hear frequently from those looking for an insight gleaned from the crystal ball I don't have. What I do know is that investing a little chunk each paycheck or month while not letting what's happening (or not happening) in the market or world dictate your behavior can be a calming approach to investing.

4. It Can Also Leverage Time

When investing, the time value of money is a complicated way to say that compounding total returns -- earning money on your earnings -- is a powerful ally to have on your side. But that's only the case if you get started sooner rather than later. And now for the requisite "oooh-aaah" moment: $100 per biweekly paycheck growing at a hypothetical 6% will be $431,476 in 40 years. That should wipe out any investing-associated grimace and put a smile on your face.

Of course, the best thing about systematic saving or investing is that it can put you on a path toward meeting your goals, whatever they may be. Vanquish your fear, move forward and build for the future.

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