Young Investors: Don't Wait! Start Investing Now

Investing isn’t just for the experienced hedge fund manager, young investors looking to grow their money have plenty of advantage to take action now. The sooner you start to invest, the more time your money will have to grow. Let’s go over the benefits of investing young, and how your money will start working for you.

Retirement – Start Saving For Your Future Today

You may consider waiting until you’re a little more financially stable before you take the plunge into the 401(K) offered at your job. We all want to take home most of our pay check, yet since you’re starting young, the money set aside for investing doesn’t have to break your wallet. It can be as simple as using money that would normally be spent on coffee runs or the latest cell phone and instead putting it towards a retirement savings.

Living within a budget requires a little sacrifice, however, investing will be easier to afford now since your financial obligation will change once you start a family, or buy a home. Considering that you don’t have these obligations, another option would be to use some of your free time to turn your hobby into a side gig. Love writing, photography or web design? The extra money you earn can be invested into your retirement savings.    

Your Advantage Over the Late Bloomers

The earlier you decide to invest in a fund, the less money you will have to contribute over time. For example, you are 23 and you decide to invest $1,200 a year into a mutual fund account, which is affordable at $100 a month. This is compounded annually at a rate of return of 10 percent a year. Your friend, also 23, decides to wait 10 years before putting money into a mutual fund and begins investing $3,000 a year at the same rate of return. Once you reach 40, you can no longer afford to invest, so you discontinue your contributions. Yet, by the time you reach 55, your nest egg will be valued at $308,483 and your friend will have a fund worth $260,049. You invested $20,400 and your friend, $66,000. The tactic is to invest affordably now and let the fund continue to grow after you have stopped making consistent contributions.

Be in it for the Long Haul

Make the commitment to long term invest, as focusing on the present will only lead to bad habits. When the market goes through its up and downs, you can remain calm during panic time. Since you have made the decision to start investing young, you will be giving the market time to correct itself, and your investment will bounce back from any downturns. You also can afford to take more risk in your investment portfolio when you decide to invest for the long timer. If you take a loss on a high risk investment, you will have the time to recover.

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