Why You Need To Start Investing Early in 2021Don't be one of those folks who put off investing until their buddies begin to retire. You have plenty of time, but it will be gone before you know it.
So, if you're a young investor searching for inspiration or just wondering if it's a good idea to start investing early, here are my top 10 reasons to do so.
#1 â€“ Your Expenses Are Low
My housing prices have nearly doubled since then, my wife and I spend considerably more on food, we have a kid on the way (which I'm informed will add a few more expenditures), and we have added term life insurance to the mix, despite the fact that our renter's insurance is still affordable.
â€œIf your costs are ever minimal in life, start investing and watch your money growâ€ â€“ me
Is there any poetry about money? You probably didn't see that coming.
#2 â€“ The Power Of Compound Interest
They were, after all, talking about the potential of compound interest. While you may grasp the fundamental notion of earning interest on interest, the most essential aspect is why it matters in your life.
As you begin your professional job, your life will be dependent on your salary. This is how life will continue to be for non-investors.
However, for many investors, especially those who started early, your yearly pay will eventually be surpassed by your investment earnings.
Even better, if you continue to invest $1,000 every month until you are 65, you will have roughly $9 million. And what's 10% of 9,000,000? 900K.
That's a fairly excellent annual salary, in my opinion.
This is why, instead of relying on a job, people may live off the interest in their assets.
Compound interest is the 8th wonder of the world. He who understands it, earns it; he who doesnâ€™t, pays it.â€ â€“ Albert Einstein
#3 â€“ Valuable Experience
Experience is the only thing that can replace it. So, why not begin acquiring that experience as soon as possible?
That way, while your friends are learning how to invest and bemoaning the years they should have been investing, you will have the knowledge and expertise of a seasoned practitioner.
Plus, and this is a crucial point, your investment expertise will enable you to see through the falsehoods and con artists that exist.
Because they've seen the combination of those two things work in their own lives, experienced investors know that time and consistency are the keys to riches. And your knowledge will enable you to see through any falsehoods that say otherwise.
#4 â€“ Youâ€™ll Form Better Financial Habits
This is the period during which you begin to develop financial habits. While the majority of people spend more than they make, take out loans to buy things they can't afford, and open more credit cards because they've been led to believe their credit score is more important than their net worth (I know because I was one of them), you'll be forming good, prosperous, wealth-building habits.
#5 â€“ The Investing Bug
This is what I refer to as the "investment bug." And the sooner you start investing, the better your chances of catching it.
You'll want to stay up late reading about index funds if you get the investment itch. It will discourage impulsive purchases in favour of increased investment. It will also motivate you to go out and earn more money in order to invest it.
It's the equivalent of contracting a cold. Instead of making you feel bad, it makes you feel energized and affluent. So it's the complete polar opposite of a cold.
#6 â€“ Higher Risk Tolerance
Now, I'm not suggesting that 20-year-olds take all of their money and put it in risky, stupid investments. What I mean is that someone who has 40 years before retirement has a better chance of generating money on higher-risk investments than someone who has only five years.
Remember that compound interest takes time to work, and higher-risk investments are no exception.
#7 â€“ Investing Early Leads To Financial Freedom
One of the numerous advantages of investing early in life is the flexibility it will give.
You give yourself the freedom to pursue life boldly and with a purpose by investing early.
#8 â€“ Investing Early Provides Financial Security
To put it another way, early wealth serves as a safety net in the case of a financial disaster.
Now, I know that this isn't the most compelling argument to begin investing early. However, if the day comes when you need to rely on your riches to get by, you will be grateful it exists.
Life is difficult. Invest early and plan ahead.
#9 â€“ Early Retirement
Don't be one of those folks who put off investing until their buddies begin to retire. You have plenty of time, but it will be gone before you know it. The sooner you begin investing, the sooner you will have the choice of retiring.
#10 â€“ Youâ€™ll Regret It If You Donâ€™t
I've been there, and it's an awful experience.
So, take a step toward riches and begin investing as soon as possible. Who knows, maybe you'll get the investment itch!