Being an investor in your young adult life may sound quite risky. However, that risk itself is the primary reason why investing before you reach the age of 30 is the surefire step to a healthy financial future.
As a young professional who does not have a lot of financial responsibility, instead of spending your extra income on the latest gadget or to an out-of-town trip, start investing in stocks instead. Your future self can enjoy all the latest gadgets and vacation spots later with your loved ones and family. Sounds more promising, right?
Investment risks aren’t as risky when you are only mainly spending for yourself.
When you are already in your late 30s, you might already have a family that you will need to provide for. That involves a lot of unexpected expenditures, thus there are fewer chances for you to be able to set aside a sum of money to invest. Also, in order to earn a profit from the stock market, your investments must remain untouched for as long as possible.
If money emergencies are frequent, there are higher chances that you’ll withdraw your still-low earning investment. However, this does not automatically mean that investing later in life is a huge setback. In fact, Forbes wrote an article about investing in your 40s. However, the article is not shy on saying that investing at the age of 40 is considered late.
You will have the advantage of time if you invest early.
The stock market fluctuates. Take for example the Hikma Pharmaceuticals share price. If you look at its 4-hour earnings, you will see that the share price depreciated. However, if you check on its 15-month performance, the overall share price increased through time. The same situation goes to all the investments available out there. Therefore, if your money had a lot of time in your investment portfolio, there will be a higher chance for it to increase in value.
It will be easier to correct investment mistakes at an earlier age.
Since you are investing at an early age with less financial responsibilities, making mistakes with your investments bear fewer consequences. Business Insider made an article about the 9 worst money mistakes to make in your 20s, and by the looks of it, there is much more salvation in overspending in your 20s than in your 30s. Creating mistakes in this venture is inevitable, but correcting them when there are less financial risks feels a lot more comfortable. Simply because you do not need to carry the weight of losing your money on a bad investment when you still need to pay your mortgage.
The world of investing may be too intimidating for someone who is still starting to handle their own finances. It is not something a person can learn overnight. But if you wish to have a happier, wealthier future, then starting early has its advantages. After all, time is money. The more time you have, the more money you earn.