Investing any amount of money is never a futile exercise, thanks to the magic of compound interest and compounding. The amount that can be invested in a single year can increase substantially, visit https://www.sofi.com/investing-101-center/ to get more information. At the very least, it’s a good idea to have a pot of money you can tap for whatever you need. You’ll definitely want to keep your money in an FDIC insured bank (the best) or brokerage account (good enough), just in case you want to take advantage of any one of these retirement funds. In a nutshell, it’s a good idea to have a stash, just in case the money you need comes in handy.
As you can see from the example of two investors, what you need to make money in a passive investing style is a certain amount of capital. You can invest your $20,000 in various passive strategies and get a good return, but if you can’t generate an extra $3,000 every year, you’ll always need a little money to help you keep afloat.
Now, here are two other things to keep in mind:
first, since active management is a type of passive management, you’ll make a bit less money and your returns won’t be as good. Second, you’ll need to keep up with the latest technology and investing. Most active managers are very aggressive, and since you won’t make any extra money by putting your money in a passive strategy, you’ll need to keep an eye on the stock market in order to keep up. Finally, I’d like to point out that I’m not a good advisor, so this information is all my own opinion.
You may not be able to be the next Warren Buffett, but this is the right strategy for you. You have the right kind of money (more on that later), the right kind of idea, and you have some time. I know, it sounds crazy, but it’s true! So don’t be discouraged, keep on going, and remember that the key is to not stop working at this thing you love!
How much time? You can never rush life or things, right? If you stop making a living by putting your energy into something that you love, that is going to be painful. Your brain has to work on your problem (in this case, starting a company), while you have to pay the bills. A long term investment means you are going to have to pay high interest rates for a very long time.