For most young people, especially low income earners, investing is not a priority. Youngsters wait to become more financially stable so as to engage in investment decisions not realizing that there are countless opportunities sliding by. The fact is, beginning the investment journey early in life sets you up for more financial freedom in your latter years. Below are some of the reasons why you should start investing early in life.
Ability to risk more In the investing world, the younger you are, the more risk you can undertake. You can invest in more volatile investment instruments because you have fewer financial responsibilities and are naturally driven to risk, thereby benefiting from the higher-than-average returns.
While in the early years of life, you have a lot of individual years to invest. When money is put in an investment vehicle over a long period of time, it earns more because the earnings from the original investment are reinvested. A small investment made in your younger days will usually generate more than a bigger investment made when older. Therefore, investing early offers the advantage of making more money. This is also true because as a young person, you are less likely to interfere with the investment and let it run its full course.
Flexibility and Recovery
While most young people are not adept at investment techniques, they are very flexible and can learn the ropes much faster. The successes and failures encountered along the way are key to sharpening their investing skills. For these young investors, there is enough time to recover from mistakes and losses incurred from their investment choices and decisions.
Better Personal Financial Management
Engaging in investment decisions early in life enables you to cultivate financial discipline. This is especially the case when your income increases. When you start investing when still young, the idea of looking at the future becomes so deeply etched that the financial decisions you make are based more on investing than spending. This builds financial character and rewards you in your later life with more wealth.
Future debt-free purchases
Growing older comes with more responsibilities such as owning a home and other property. Investments that you had undertaken in your early days have now substantially grown. You can use the money generated to buy property and other assets without incurring debt and further interest cost. Investing when still young may seem like a daunting task at first, but the payoff later in life will be worth the sacrifices made.