Investing at a young age can sound intimidating. And, it is! But saving from your paycheck and letting it sit in a savings account idle doesn’t do any good to you. Plus, there won’t be any sudden short-term satisfaction when you will be reaping the benefits of investing in your thirties.
However, investing at a young age is the smartest way to achieve the financial goals you want and build wealth. Here’s how investing early benefits you:
1. Low Expenses, Easy Investing
Without a doubt, the age between 17 to early twenties means fewer expenses. There’s not much in terms of monthly expenditure. The real deal starts when you graduate, look for a job, a place to live in, and possibly get married.
That is when your expenses will increase. So, investing early can prepare you for hard times. You won’t have to rely on the minimum amount available in your savings account when your savings can double and triple overtime through investing.
2. Let Your Money Work for You
The power of compound interest is highly beneficial if you look at the statistics. You must have heard of earning interest and earning interest on interest. If you aren’t aware of interest on interest, it simply means compound interest.
The million-dollar question is, how is compound interest beneficial for your life? Through what ways can it help you? If you observe the life of a person that recently graduated and has a job, you will observe them living off and relying solely on their paychecks.
There is no other way of income for them. This is how they will live until they start to invest. However, for investors (especially the young ones), the annual investment earnings will most likely be more than your annual salary.
For example, suppose you invest $1,000 every month in a mutual funds account that returns you an annual return of 10% from the time you turn twenty years of age until you turn forty-five (and possibly reinvest your earnings). In that case, you will have made more than one million dollars as an investment.
This means the 10% makes an extra $100,000 every year for you. That is the magic of compound interest. And if you keep investing $1,000 every month till you turn sixty-five, you will have almost nine million dollars in investment.
3. Exposure and Experience
We can’t learn a skill until we practice it daily. As the famous saying goes, “practice makes a man perfect.” This saying fits perfectly with investing as well. If you want to become a wealthy and top-of-the-line investor, you need to invest for a couple of years.
You can’t substitute valuable experience with anything else. So, why not starting gaining exposure and build that valuable experience from a young age?
You might be thinking, how does this help? Well, down the road and a few years later, when your friends and people of your age would start investing and learn the ins and outs of it, you will have become a professional with an experience of a professional investor.
4. More Time to Recover From Losses
Investing at a young age is extremely valuable in terms of facing a loss. Investing at a young age makes you more receptive to seasoned pro’s advice. From there, you will be taking the step of learning from your mistakes.
You will also give the famous investors and their way of investing a chance and adopt it. However, going down the road of investment, you will most likely make some bad decisions that will make you lose some money.
But, starting investing at a young age and from a small amount (until you are sure you should invest more) will help you recover from the losses you have faced. This will happen by changing your investing strategies.
You will have ample time to learn from your mistakes and rectify them, which people in their late twenties and thirties don’t have.
5. Youngsters Can Take Risks
This is how life works: the older you grow, the more financial obligations you will face. From buying a house and car, raising your children, medical expenses to paying bills and school fees, you will be bombarded with financial commitments.
With all these responsibilities on your shoulders, you won’t be able to take valuable risks. Because what if you lose your money and lose everything you have? You must have noticed older people investing more in low-risk assets (deposits and bonds).
This means low risk and fewer returns. But investing at a young age gives you the advantage of being free from these financial obligations. It also enables you to take the necessary valuable risks while investing.
As higher risks lead to higher returns, gaining compound interest on these returns will make you wealthy sooner.
6. Get Financial Freedom
Relying on a typical 9 to 5 job will never give you the financial freedom you are looking for. It will hardly pay off your monthly expenses. If you look at the millionaires of every industry, you will find that they invest in more than one type of asset.
They never relied on their salaries to become millionaires. Instead, they have many sustainable income streams, including rents and gains from investing in properties, business, financial securities, or investing in dividends.
Being careful and responsible in investing in different types of assets and gaining returns, and then reinvesting the gains responsibly is the perfect formula for making you wealthy in the long run.
In short, investing from an early age will give you financial gains and will make you less reliant on your monthly salary. And when the time comes (or if you want), you can retire or semi-retire at a proper young age than most people of your age group.
Investing not only offers gains and wealth, but it also teaches you valuable life lessons. It makes you patient, responsible, and resilient, so you can stand the test of times and prepare for it from a young age.
Stock Market Investing is what new young investors should be looking at right now!
The first time I tried, I lost it all. Every penny I put into a stock market…the market crashed…and I was left with empty pockets.
But this is not the reason why I wrote this book. And I didn’t want you to read about how I lost everything and gained it all back and more.
The reason for this book is to teach motivated people like you to pull as much cash out of the stock market as possible Today. And do that with a few ups and downs. Is that what you want?
Take a look at what’s inside:
- Are you a complete stock market newbie? This chapter is going to set you for a decent and profitable start, so read carefully….
- Is the stock market investing for you? Discover 3 biggest benefits
- “The Law Of Supply and Demand” – what it is and how it can affect your investing strategies?
- Stocks vs. Gold, should you consider both or just stick to one? Which one is more profitable long term?
- How to create your stock trading style for fast cash and whether you need it initially?
- Long-term vs. Short-term investing, the most profitable strategies according to your financial needs and desires
- How much money do you need to get started? Can you start with none? (don’t worry if your budget is very small, I have special strategies that will help you overcome this obstacle)
- The #1 platform to start stock trading as a complete beginner (Perfect for experienced investors and traders as well)
- When is the right time to sell and max out your profits?
- What about taxes? Should you pay any, and are there any legal ways to avoid them?
- And much much more..!!
And even if you are a complete stock market newbie and haven’t invested a penny in your life, this book will take you by the hand and lead you through every single step!
(Note: This guest article is written by ELLE J. C.)