Ask most investing experts, and they’ll tell you that the best time to start building your portfolio was yesterday. The sooner you can begin putting money into stocks, securities, and other assets for your future, the quicker you can begin building returns on your investments that compound dramatically over time. Every year that you put your spare savings into your bank account is a year of wasted interest – that lost money can really build up over time.
Unfortunately, a lot of younger people in their twenties assume that it’s impossible for them to start investing unless they have thousands of dollars to put away somewhere. However, the truth is that this isn’t the case. Anyone can start investing early these days, and we have some reasons why you should definitely start young.
1. Young Investors Have time on Your Side
When you’re a young investor, you might not have a lot of money to get started with. In fact, some younger investors decide to use loans such as those offered by Cobra to help them take advantage of new cash opportunities. However, the good news is that even if you take this route, you have time on your side. You can begin with a low-cost solution that only pays a small amount back in interest, and you can gradually build your portfolio over time.
Having time on your side and a longer period in which you can build on your savings means that you can take advantage of more opportunities that other people simply wouldn’t be able to access. Remember, in the world of investing, compounding interest is extremely powerful. The earlier that you get started placing your money into the right solutions, the more you’re going to gain overall.
2. You Can Learn A Lot
As you get older, you have less time in your schedule to learn about things like stock markets and investing. When you’re not at work you’ll be busy working on looking after your family. However, when you’re young, you’ve got more spare time that you can put into figuring out how the markets around you work, and how you can make the most of them.
At the same time, you’ve got the opportunity to make more mistakes with your cash if you need to. Even if you decide to get involved with riskier strategies of investing, you won’t have to worry about things like never being able to make the money back that you’ve lost. You still have plenty of earning years ahead of you where you can get yourself back on track.
3. Improve your Spending Habits
Choosing to start investing when you’re still young gives you the focus you need to start getting your budget on track. You won’t have a lot of money in your bank account to put towards your investing, which means that you’ll need to think carefully about how you’re going to spend your cash. Investing regularly gives you an opportunity to see how the purchases that you may in the short-term can pay off for you in the long-term.
While other people in their twenties are spending all their cash on nights out and fancy meals, you can see that the small payments you make into your investment account will give you more security in the long-term. For a lot of younger people, this can lead to a much better quality of life, because you know you have something put aside for your future. You don’t have to worry as much about your money. With less time spend stressing over your finances, you can begin to really enjoy your life.
4. You’ll have a Better Future
Ultimately, the quicker you begin investing into your future, the easier it is to build a fantastic life for yourself down the line. While it might mean that you have to budget more carefully in the short-term, you’ll know that no matter what happens with your job and other spending strategies, you always have something waiting for you when you decide to retire.
What’s more, it’s easier to get started than most people think. Simply agreeing to put a portion of your earnings into the retirement strategy that your employer offers ensures that you have something that you can use to pay your bills in the future. A lot of employers offer strategies that allow you to get a matched donation whenever you pay into your retirement account, which could lead to huge benefits in the long term.