Start Young: 5 Reasons Why It’s Important to Invest at a Young Age

 

Simply put, the younger you start investing your money, the better. The benefits associated with making smart investments are widespread, but most revolve around the premise of allowing your money to grow. Because increasing your investments is the main goal, starting early makes the most financial sense.

More Time Equals More Money

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The best reason to start investing when you’re young is because you have more time. The longer you have your money in one place, whether it’s a simple savings account or a retirement plan, the more it grows. Of course, with an investment, you earn far more interest than you do with a basic bank account. Invest $10,000 and in 10 years, you’ll have a low-ball six-figure investment. Do it for 40, however, and you’ll have seven figures.

It’s Easier to Reach Your Goals

People usually invest their money for a reason, because it’s not a way to get rich overnight. It takes time and nurturing. So, perhaps you want to make sure that your children can go to college without any financial aid. Maybe you want to do that yourself. Whatever the case, if you begin investing early, by the time you hit middle age, you’ll have significant amounts in:

  • Retirement accounts
  • College funds
  • Or emergency savings

That’s why it’s such a great idea to start a savings or investment account for your children when they’re small. The thing is, a solid, long-lasting investment created at a young age is beneficial for you too.

Practice Makes Perfect

If you start learning how to ride a unicycle when you’re 10 and you keep at it, you’ll excel by the time you’re 20. If you’re good at math in grade school, you nurture your gift and conquer calculus when you’re in college. The more time you spend doing something, the better you become. The same is true with investing. By starting early, you’ll learn the ins and outs of different types of investments:

  • Fixed-income security investments, such as bonds
  • Equities and stocks, which can rise or fall
  • A mix of both, by way of mutual funds
  • Real estate, which is lucrative but not always steady
  • And gold

You Form Smarter Investment Habits

As you get better, you have time to learn from the experts, by asking questions from money managers or reading the latest bestsellers and other books by Ken Fisher. As you invest more, you’ll come into your own by discovering which investments and strategies work best for you. Even if you take a loss in your early twenties, there’s plenty of time to make up for it and to learn from your mistakes.

Quitting While You’re Ahead

Investing while you’re young will also help secure your future. You can literally quit while you’re ahead. If you’ve made smart investments in a 401(K) or IRA, you can retire early. By the time you hit middle age, you may never have to work another day in your life, all because you’ve made smart investments and allowed them to grow.

No matter how old you are now, there’s still time to start investing. What would you do with a hefty, wealthy savings plan?

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