Being a young adult in today’s society is no easy task. Finding work and supporting one’s self while having to deal with a difficult global economic environment, means that many people who have recently joined the ranks of the world’s workforce are struggling to balance their incomes and expenses. This often leaves little room for long-term commitments – namely, investments. However, investing from a young age is one of the biggest secrets to investing successfully. Factors like compound interest, investment experience and trend knowledge make investing from as early as possible an important step in gaining financial experience, and ultimately success. As the over-used (yet somehow still appropriate) saying goes: “The early bird catches the worm”.
Investing has become an essential part of the international economy, and for one to make the most of the investment system, it is extremely important to begin as early as possible. The key to investment success is compound interest – which means that the longer money has to grow, the more it can grow. Essentially, investment depends on input – the more you invest over a longer period of time, the more returns will follow. Investing from a young age also gives you the chance to garner and perfect some necessary skills for investing successfully. By having an early start, you can gain experience through practical trial and error, and learn vital techniques and good habits. Techniques such as following the correct trends, diversifying investments, and intentional (as opposed to emotional) investing, do not come naturally and are best mastered through long-term experience.
When you start investing from a young age, it also encourages the development of essential financial habits, such “putting away” money within your monthly budget. Setting aside money in a time when most young people are only beginning to earn a basic living to cover their expenses may seem like a difficult task, but by learning how to include such elements in your lifestyle is an indispensable skill. This type of skill is useful not only in terms of investment, but also when dealing with finances in general. The fact that most young people earn a more disposable income is such that they do not have a family or children to support, and generally have less expenses (such as bonds, loans, and payments) and less responsibilities; means that they have more opportunity to use their income for investing and learning habits that over the long-term create positive investments. By doing this, you could create a so-called “cushion” of investment. This “cushion” means that since you had an early start, should any investments lose value or take a negative turn, there will still be existing invested finances and investment experience to fall back on. It also means that you, as an early investor, have the possible option of ending your investments, and reaping their benefits earlier – and perhaps even retiring sooner.
Ultimately, it comes down to gaining experience and catching a head start. The earlier the better – the sooner you start investing, the longer you will give your money to accumulate and the longer you will have to learn how to invest successfully. You will be giving yourself a chance to develop habits which will not only help in investing, but in all spheres of life, and providing yourself with a good foundation of funds and skills for the rest of your life. It is important to remember that long-term goals outweigh short-term goals, and although investing when young; however little it may be; can seem like a futile task, it is an investment in your own future.
1.618 Financial Services are at the top of the investing game working with the top investment companies to make sure we get the best returns for our clients. Take a look at the investments section on our website and start your legacy early: http://www.1618financialservices.co.za/financial-services/investments