3 reasons why you should start investing early
Are you in your 20s, trying to understand the dos and don’ts of investing? I bet you feel excited about the idea of earning passive income, but you are also scared to start doing it, right? You must be thinking that there are so many things you need to learn before you can start investing.
It is usual for young adults to think that they should start investing only when their financial situation gets a little more stable. Of course, you don’t exactly know when that will happen, but at least you are hoping that stability will come soon enough.
However, there is no better time to start investing than right now.
It’s easier to take risks
As a potential young investor, you have an advantage over older investors. You see, when you start investing from a young age, the time is on your side. At an early age, when you are not married, have no kids and not that many responsibilities it is easier to take a risk because you have almost nothing to lose.
And believe me, investments are risky. Even the most calculated decisions have some amount of risk. Getting into the investment game at a very young age gives you the luxury to fail and learn from your mistakes. And by the time your peers only start thinking about investing you will already be at the top of your game.
Time is on your side
Whether you want to start investing for your early retirement, in the stock market or you just want to do it for fun, time is on your side. Besides the fact that you have more time to try things and learn from your experience, you also have more time to collect dividends and accumulate compound interest.
Let’s say, at your 20-year anniversary you start saving $400 a month with a compounding interest of 5% for 30 years. By the time you are 50 years old, you will have $320,635 on your account. However, if you start saving when you are already 30, with the same annual interest of 5% you will have only $159,777 when you get 50.
Invest in human capital
Investing doesn’t always mean buying real estate or investing in the stock market. It also means investing in people, especially in yourself. You can invest in yourself in many different ways. You can start a course, get a degree, read a book, take a trip or do anything that will help you learn something. You don’t have to learn everything or read every book you can find. The more focused you are on one thing the easier it will be for you to use that knowledge to get somewhere.