So many people assume investing is something you do once you have a lot of money. It’s easy to believe that you need thousands of dollars, years of financial experience, or a high-paying job before you can even think about getting started.
But, that’s not true! Investing is more accessible than people think, and understanding the basics is often the first step. You don’t need to be rich to start learning about investing or building your financial knowledge.
Common Investing Terms You Should Know
- Asset: Something you own that has financial value. In investing, assets are purchased with the goal of growing in value or generating income over time.
- Stock: A small piece of ownership (a “share”) in a company. If the company does well, your share can grow in value; if it doesn’t, it can drop.
- Bond: A type of investment where you lend money to a government or company, and they pay you interest in return. They’re generally considered lower risk than stocks, but they also tend to grow more slowly.
- Mutual Fund: A type of investment that groups together many different investments, such as stocks and bonds, into one place. Instead of buying each investment individually, you can invest in them all through a single fund.
- ETF (Exchange-Traded Fund): A single investment that holds a collection of many stocks or bonds at once and trades on a stock exchange. Buying one ETF spreads your money across lots of companies, which helps lower risk—a popular starting point for beginners.
- Risk: The chance that an investment could lose value or not grow as expected. In general, investments with the potential for higher growth also come with more risk.
- Diversification: Spreading your money across different types of investments instead of relying on just one. Think of it like the saying, “Don’t put all your eggs in one basket”.
- Interest: Money you earn when you save (it grows your money), or money you pay when you borrow (it grows your debt). It works for you on savings and against you on things like credit cards.
- Compound Growth: Think of it as “growth on top of growth.” As your investment earns money over time, those earnings can also grow, helping your investment build over time.
What Is Investing?
Investing is the process of putting money into assets (which are things that hold value), to help your money grow over time. Unlike saving, which is typically intended for short-term goals or emergencies, investing is generally a long-term strategy to help your money grow.
Common investments include stocks, bonds, mutual funds, and exchange-traded funds (aka ETFs). While these investments have the potential to grow, it’s important to remember that investing also involves risk. Unlike a savings account, there is no guarantee you’ll earn money, and the value of your investments can go up or down over time.
That said, investing isn’t about trying to get rich quickly. For most people, it’s about making consistent, long-term decisions that support future financial goals.
You Don’t Need a Lot of Money to Start Investing
One of the biggest myths about investing is that you need a lot of money to get started. In reality, many people start with relatively small amounts (even $25 is enough!) and gradually build their money over time.
Waiting until you feel like you have “enough” money can sometimes become a reason to put off learning about investing altogether. Building the habit of investing is just as important as what you actually invest.
Small contributions made consistently over time can be more valuable than waiting years until you have “enough” (whatever that means to you). Starting with what you can comfortably afford allows you to begin learning while developing healthy financial habits along the way.
Why Starting Early Can Make a Difference
When it comes to investing, time can be your best friend.
One reason people choose to start investing early is because of compound growth. Compound growth means that your money has the opportunity to grow over time, and as it grows, those earnings can also continue to grow. So instead of only earning on the money you originally invested, you also earn on the growth.
For example, if you invest $100 and it grows to $110 thanks to compounding, future growth will build on the full $110 rather than just the original $100. Over time, that compounding effect can make a big difference.
This is one of the reasons starting early is a good idea. Even if you begin with small contributions, giving your investments more time to grow can make a meaningful difference over time.
Why Not Just Leave Your Money in a Savings Account?
Savings accounts are a great place to keep money for emergencies or short-term goals, because they’re safe and easy to access. When you keep money in a savings account, the bank pays you interest, which is a small amount of money earned simply for keeping your money there.
While this does help your savings grow over time, interest rates on savings accounts tend to be low so that growth is often gradual. At the same time, the cost of everyday goods and services tends to increase over time due to inflation. This means the same amount of money may not buy as much in the future as it does today.
That’s one reason people choose to invest for long-term goals. While it comes with some risk, it also offers the potential for your money to grow more over time, helping it keep up with or outpace rising costs.
Build Your Knowledge Before You Invest
Before opening an investment account or choosing where to invest, it’s important to understand the basics.
Learning about concepts like risk, diversification, long-term investing, and how different types of investments work will help you make more informed decisions. You don’t need to become an expert overnight, but having a strong foundation can make investing feel much less intimidating.
For young women across Canada, building financial literacy also increases confidence around money and planning for the future. The more you understand, the better prepared you’ll be to make decisions that align with your personal goals.
Every Investment Journey Starts Somewhere
Investing isn’t about waiting until you have a perfect amount of money. It’s about taking informed steps toward your long-term financial goals when you’re ready. Whether you start with a little or a lot, building good habits and understanding the basics can make a meaningful difference over time.
If you’re ready to take the next step toward investing, contact FuturFund to learn more about our mission, connect with our community, and access financial resources designed to help women invest with greater confidence.
Frequently Asked Questions
How much money do I need to start investing?
There isn’t a single amount that’s right for everyone. Many people begin investing with relatively small amounts of money. The most important step is investing when you’re financially ready and taking a long-term approach.
Is it better to save money or invest it?
Saving and investing serve different purposes. Savings are typically used for short-term goals and emergency funds, while investing is generally intended to help your money grow over time.
Why does starting early matter when investing?
Starting early gives your investments more time to benefit from compound growth. Even small contributions can have more opportunity to grow over the long term than waiting until you have a larger amount to invest
Can I start investing if I’m new to personal finance?
Yes, everyone starts somewhere! Understanding the basics of investing and building your financial literacy can help you feel more prepared to make informed decisions when you’re ready to invest.
