Last Updated on September 23, 2021
As a young adult, investing may be the last thing on your mind as you navigate life as a recent graduate. But despite a significant lack of education on the subject, it can be a great way to manage your finances and safeguard your future for decades to come. Continue reading to familiarize yourself with the benefits of investing while you’re young.
1. You have more time
Statistically, young adults are more likely to be burdened with college debt and poor salaries. Whilst this may deter you from investing, it can provide you with more time to grow your investment portfolio from the ground up by the process of compounding. In order to generate wealth over time, you require the and a significant amount of time.
As a result, there is no better time to get involved than while you’re young and have the least amount to lose. For example, by investing $5,000 at 20 years old, it would grow to $35,000 by the time the investor was 60 years old with a 5% interest rate. By doing so at 40 years old, however, the same investment would only yield $13,000. When it comes to investing, time is money.
2. You are tech-savvy
In today’s digital landscape, young adults entering the workforce are the generation that has grown up alongside a number of key technological advancements. As a result, they are equipped with greater knowledge and experience of technology and can put their expertise to good use by investing in emerging technology. With a growing number of investors, such as , venture capitalist Jim Goetz, and Instagram’s first investor Steve Anderson, jumping on board the tech investment train, it can pay to get involved while you’re young.
3. You can take on greater risk
As you age, you are less likely to be able to withstand risk. As a result, investing while you’re young can allow you to take on greater risk. This is one of the main reasons why investors nearing retirement age tend to favor low-risk, or even risk-free, investments such as bonds or certificates of deposits. If you are yet to set foot into the investment world, you are in a greater position to build an aggressive portfolio that is subject to more volatility and even more gains.
4. You can learn as you go
When it comes to investing, there is only so much you can , course, or online forum. In order to experience investing first-hand, you must get stuck in at the earliest convenience. As a young adult, you benefit from greater flexibility and time to learn as you go and, more importantly, learn from your mistakes from the very onset.
If you are considering investing, it may benefit you to start while you’re young. This is because you have more time, you are tech-savvy, you can take on greater risk, and you can learn as you go.