You’ve graduated and you’re finally joining the working class. Paychecks come in twice a month and you try to maximize your low initial income by throwing a small percentage on your savings account, catering to your basic needs, while leaving the rest for some self- indulgence. But you may question yourself, “is there’s more to life than this cycle?”
The answer is in your hands. You can spend the rest of your life making the ends meet or you can take the bold move of making the most of your income by investing today. I’m sure you’ll prefer the latter. There are a lot of investment types and investing styles to choose from including mutual funds, individuals stocks and bonds, real estate, and owning all or part of a business.
“Investing is the process of laying out money now to receive more money in the future,” says the legendary Warren Buffett, a prominent business magnate, philanthropist, and investor. The sand inside your life’s timeglass is slowly pouring. If you’re in your 20s, then you’re in the perfect position to increase your net worth and savings, and obtain financial satisfaction by entering the world of investing. And no, you don’t have to wait ’til your financial situation becomes a little more stable before you make investing decisions.
Ready to learn about investing? Before you start, read on to see why investing in your 20s is beneficial and thus, should be prioritized.
- Time is on your side
The earlier you get started, the longer period you have to be able to save and reap profits from the investment. In fact, most folks who began investing during their younger years end up with far more than those who started investing later in life. You may see your money to be tight for now but it’s possible to grow that money by using your time advantage.
The term “compounding” should be one of your favorite basic investing terms. It is the process where the value of an investment increases due to the interest incurred on the earnings (on an investment) as time flies. Compounding returns may help grow an investment by reinvesting the earnings, generating wealth over time.
- You can withstand taking investing risks
Young people are notorious for being risk-takers and such characteristic is integral in investing. With years of earning and learning ahead of you, you can afford to take on more risks in your investment activities when compared to folks reaching their retirement years. Looking at the brighter side, you see risks are crucial in establishing more aggressive portfolios which are subject to producing larger gains.
We’re not suggesting you take risks after risks and find yourself paying large debts in the long run. Never put all your eggs in one basket, as the old saying goes. There should be boundaries. You can start by investing in small-cap stocks, trading financial securities like stocks, Forex, and CFDs, and investing in yourself by pursuing a degree with a specific goal in mind.
- The gift of technology is in your hands
When it comes to technology, we cannot deny that the younger generation has the advantage. We’re not just talking about high-tech gadgets and innovative digital apps and software. The youngsters have the natural ability to rapidly adapt to the dynamic and fast-paced digital era.
Online trading platforms welcome young, tech-savvy investors with open arms. You just have to study and apply online technical and fundamental analysis tools and techniques, which are conducive to gaining success in the markets and boosting your knowledge base and expertise.
- You are flexible and capable enough to learn
Engaging in the world of investing is a lengthy learning process. Unlike older folks with bigger priorities, younger investors tend to be flexible enough to learn the basics of investing, as well as its complexities. Your mind is sharp enough to grasp the concepts and form great investing strategies.
You’re young. Should you make mistakes, you still have a lot of time to learn from those mistakes, recover and redefine your investing or trading strategies. You have more time to study the markets., learn from both ups and downs, and build your portfolio. These are just some of the things that are difficult to commit to by the time you get older and everything becomes more complicated.
- You’re ahead of your personal finances game
Investing early allows you to develop positive spending habits. You’re less likely to have issues with overspending and debt in the long run since investing teaches valuable lessons. By growing your investments over time, you’re confident to be ahead of your game. You get the quality of life even in the tough times and gain financial security at an early phase of life.
Author Bio: Sophie Harris is one of the resident writers for FP Markets CFD Trading, a CFD and Forex Trading provider in Australia with over 12 years industry experience serving global clients. Writing informative content about business and finance is her cup of tea.