Why Investing is a Great Idea: What Nurses Need To Know

Compound interest is sometimes called the world's eighth wonder —and for good reason. Investing early allows your money to grow, and after a short time, that interest earns more interest. This article isn't meant to be a comprehensive recap of the investment world but rather a primer on why it's a great idea to get started investing early and often.

Angel Mathis ARNP, RN, and owner of Nurses Investing For Wealth, says you should know these three things when getting started on your investing path:

1. What you're investing in 

2. How your investments work

3. Why you don't need a financial advisor to do it for you

Maybe you've made some less than stellar financial moves in the past. To that, Mathis says, "start right where you are. Put all those regrets behind you. Nothing will change the past." The best time to start investing and understanding your investments is right now. Nurses especially are prone to believe it's not something they can understand. This is, however, untrue. 

Millennials are investing before age 21 at a rate much higher than Baby Boomers and Gen X. This matters because, with compound interest, time is truly on your side. The longer your money is allowed to grow, the larger your nest egg becomes. Even if you wish you started yesterday, there is no better day than today to harness the power of investing and compound interest to grow your money. 

How do you get started learning about investing? According to Angel, there are three ways:

1. Read lots of books

2. Invest in yourself by taking courses that will teach you financial basics

3. Do the work

Nurses have unique traits that make them well suited to tackling complex topics like managing finances and investments:

• Ability to assimilate information quickly and apply that to real world situations

• Attention to detail

• Passion for lifelong learning 

Where to start? Don't get overwhelmed. Here is your simple to-do list:

Step 1: Track income versus expenses

You have to have more coming in than going out to invest. If you don't, figure out how you can get there. Simple as that.

Step 2: Maximize your match

Check to see if your job offers some kind of employer-sponsored retirement programs like 401(k), 403(b), or 401(a). What all this alphabet soup means is that part of your compensation includes access to these accounts, along with a company match. Your employer will generally match your contribution for every dollar you invest up to a certain percentage. It's free money, so don't leave it on the table. 

Step 3: Pay down your debt 

You may be thinking, but paying off debt isn't investing. Ah, but it is. You're investing in your own net worth by decreasing your liabilities (or debts) so reframe your perspective. Since the stock market, on the whole, returns greater than 7%, Angel says anything less than 7% interest (like a mortgage) may be worth excluding. But if you have a lot of high-interest debt weighing you down, pay it off. This step is very personal and has to do with your values around money. 

Step 4: Put your dollars to work

This step is also personal and has to do with your particular work and financial situation. Some examples of investment accounts you may want to consider:

1. IRA - traditional versus Roth (based on income)

2. 403(b) - maxing out your yearly pretax contributions

3. Brokerage account, HSA, or 529 plan

Once you take that leap, you become more and more financially independent and unstuck from a job that may not be serving you and your needs. Of course, there are many layers to building wealth, but people often assume they can't learn or need an expert's help. 

The world of investing is broad, and you can get started easily by following these simple steps. 

Remember, the more time you invest, the better, but there is no time, like the present, to begin letting compound interest work for you. Your early retirement self will thank you. 

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Disclaimer: This content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained on our site constitutes a solicitation, recommendation, endorsement, or offer by connectRN Inc.