PROCRASTINATION and the assumption that one has a lot of time ahead of them can delay one from enjoying the benefits that come with investing. Regardless of one’s age, it is never too late or too early to begin investing money, but starting early will always be better. However, the earlier one starts investing the better. Making smart investment decisions early in life can pay off for people who want to have enough for the future.
There is no way of determining, what will exactly happen tomorrow, death, accident, impairments or unemployment are all sad realities that can eliminate one’s ability to earn money by traditional means. Hence the need to start saving, investing and earning at an early age. Investing is good money management because it ensures both present and future financial security. Not only does one end up with more money in the bank, one can end up with another income stream. Saving without investing does not result in any economic activity and growth. Investing is the only way to achieve both growing wealth and passive income.
By investing at an early age of life, you learn a pattern of financial independence and discipline. An early age investment teaches the real difference between saving and investments. Never think age is barrier to making an investment, as you are never too young to invest. If you make the right investment choice, the little amount of money invested now will put more money in your pocket in the future.
Young investors have more risk taking ability than older people. Adult investors are generally conservative and prefer stability, in return avoiding high risk investment avenues like stocks. However, in capital markets, the higher the investment risk the higher the return on that investment. The probability of earning handsome returns at a young age gets enhanced with high risk taking ability. The earlier you put your money into a long-term stock, the more money you will make over time. Investing on the market at an early age allows your investments more time to grow.
Practice makes perfect! The earlier you start, the more experienced you will become as an investor over time and become good at it. If you invest early and incur a loss, you have more time to make for the loss on the investment. Whereas, an investor who starts investing at a later stage in life, will get less time to recover his losses. Thus with early investments, you’re your portfolio gets more time to grow in value.
The younger generation, if not guided, can be very reckless with their finances. Poor spending habits are developed at a younger age and these can affect them at a later stage in life. Investing early helps you to subconsciously develop positive spending habits which give you better control over your finances. With early age investments, you develop a habit of saving more. The more you invest, the more you get in future. To follow that thought process, you tend to save more by cutting unnecessary expenses and divert such saved money towards investment.
You must be aware that it will not be easy to commit towards setting aside money for investment when you are young. The temptation to spend impulsively is very high. It will take a level of determination and dedication to make it work. While it is tempting to wait for the “best time” to invest, especially in a rising market, remember that the risk of waiting may be much greater than the potential rewards of participating. You simply cannot afford not to invest. Investing early is a decision you will be very proud of.
People work hard their entire lives to make money and improve their quality of life. Starting to invest early guarantees you a good quality of life when you are older, retired or when your financial resources run dry. There will be times in life when you will need urgent money to meet unavoidable expenses. During such times, the investments made at an early age can prove to be very handy and will help you get through tough times all by yourself. The need for borrowing money from others decreases drastically with early investments. When you have surplus money invested, you will never become someone’s debtor. With money in the right investment avenues at the right age you will money to make further investments like lending to government or corporates through bonds, you become a creditor.
There is a reason that Albert Einstein reportedly quipped that compound interest was ‘’the most powerful force in the universe.’’ Once something starts growing exponentially, the effects of time on that growth can be mid-boggling. Early investments can lead to compounding returns. The time value of money increases over a period of time. Regular investments made at the right from an early age can reap huge benefits at the time of retirement. Moreover early investment facilitates your entry in the world of finance early. Your money grows with time. as a result of early investments, you will be in a better position to acquire more at a later age, which others might not at that age. This puts you ahead of others who prefer investing at a later stage of life.
The earlier you start, the easier it is to build wealth. It is true you will face difficulties to invest early in life as you might not have enough money. However, you cannot wait for the time when things get convenient for you. Start investing in smaller amounts. Give time to your investments to mature. Investing at a young age is the best decision one can take in life.
Early age investments increase the probability of reaching financial stability at a young age. Saving for retirement from the age of 20s rather than late 40s is always a better idea. Life after retirement is more challenging than it has ever been so planning for retirement now will lead to a happier life after retirement. Always remember to make hay while the sun still shines.
We live in a tech-savvy world. There are many platforms to learn and know which investment is best. With the use of technology at a younger age you can search for investment avenues that an give high returns within your calculated risk profile. Getting it right at an early age gives you confidence and helps you take more bold decisions in the future. You can also take advantage of financial advisors on the best path to financial freedom at a later age.
Time is money, and many cases, time is more valuable, this is because time can buy you money, but never the opposite way round. In this case, a younger investor’s additional working years can help mitigate investments that have gone awry. Moreover, the extra time allows riskier investments to fully expand to their potential. This remains true even with the impact of the novel coronavirus. Indeed, young investors will likely look back on the pandemic as an awful event that nevertheless transformed their financial trajectory, frankly speaking, there has never been a better time to buy great companies on discount.
Until next week enjoy making money on capital markets.
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