For most young people, being in their 20s comes with changes and figuring out life. This is the age bracket where people have a high likelihood of getting into too much debt or merely figuring their investment journey. At this age, you have the luxury to take on more risk than older people as you still have a couple of years ahead of you to right the wrongs.
Even with student loan debts, being in your 20s is an advantage as you can get into the investing world and make the most out of it. As a millennial, the idea of making your money work for you is exciting and should be a motivation for all the 20-somethings out there. So, why should you invest at such an age?
1. The Time Advantage
There’s a huge time advantage when you decide to go down that road. As much as you may be repaying your student loan debt as well as battling with a low salary due to your lack of experience, time is still in your favor. Growing an investment as early as this age could help you reinvest such that by the time you are in your 50s and 60s, you have substantial money in form of investments.
2. Less Responsibilities
At such an age, the responsibilities are not as many as at a later time. Your expenses may also not be as much as this is when you are still trying to figure out what investments will work for you. Making a crucial investment decision determines how your future will look like. Have a detailed budget that focuses on minimizing your expenses. This does not mean you should not go for vacation or a night out with friends. This means, however, that everything should be in moderation.
3. More Interest Gained
Putting away some savings comes in handy. What’s even more liberating is knowing that the money saved is earning interest. As such, the earlier you start saving, the more interest your money earns. Get financial institutions that offer such services and make a comparison on what works best for you.
4. More Informed Choices due to Technology
5. Complements on Employment
What happens if you dislike your job? Or suddenly lose your job? If you had no other plan b, you go back to the drawing board which could make life unbearable. Investments come to complement your job in cases like these that you may have no control over. Look for a steady investment that will act as a complement to your career.
6. You Have the Chance to Learn
As a young investor, you have the chance to learn about investing. You have years to learn about investments and how to approach different options such as the stock market. Through successes and failures, you get to fine tune your journey as you learn how certain decisions affect the curve. Learning through your mistakes helps figure out your journey and perfect it such that you are able to figure out what strategies work for you.
Read Also: Is playing the Lottery a Type of Investment?
7. Higher Risk than Older People
It’s easier for a young investor to take on a high-risk opportunity than an older investor.
When in your 20s, you can withstand higher risk because you still have time to make things right. However, during retirement, you may not have the luxury to explore all opportunities available as some are higher than others as they may end up in you losing your lifetime savings. Therefore, invest when still young for discovery of mega investments that could result in high returns.
While investing is a brilliant idea, here are a few factors to consider before you consider investing:
- Never compromise on paying any debt. Your credit score solely depends on how timely you are in paying credit cards as well as any other debt owed. In case of any difficulty, ensure to talk to your lenders and come up with a flexible repayment plan.
- What do you intend to achieve in the next 5 or 10 years? Have set goals for what you want in life and start working towards that. Having a vision will help you have the discipline to work towards actualizing it.
- The power of a budget. Budgeting helps you have a plan. Your budget should include the money you set for investing every month. This way, you are working towards being free financially and establishing a foundation for your future.
As a young investor, don’t be afraid to invest. Life is all about risks. Read a lot as information is a powerful tool when making such crucial decision. If at analyzing yourself you feel you need a financial advisor, get one. Do not invest in something because you hear that people are making millions out of it, invest in it because you know about it and you have analyzed the risk level and you are comfortable with it.