It is important for young adults to start investing as early as possible. Many feel they can put it off until they are in an ideal financial situation, but in most cases this is the wrong approach. Some people don’t realize that investing can happen despite low wages or debt.
Young adults have the distinct advantage of time on their side. Simply put, early investing in your teens or 20’s equals more money over time. For example, investing $5,000 at age 20 at an interest rate of just 5%, would earn you nearly twice as much if you made the same investment at age 40.
Another advantage of investing young is that you can afford to take more risks and still have time to recover if things don’t go your way. A more aggressive portfolio has tremendous growth potential compared to low risk investments such as bonds or certificates of deposits (CDs).
Investing is not a quick process and it requires a lot of time to study and get the best advice. Starting young gives you time to do your homework, without compromising valuable investment years. Young adults grew up in the digital age and are typically tech savvy. The have the ability to take advantage of chat rooms, social media, online tools and networking to learn about investing.
The most important any young person can make is in themselves. Gaining education or valuable skills will enable you to earn higher wages. The more you earn the more you will be able to invest. The key is to start earning as much as possible as young as possible. Minimizing debt is also important since this will increase the available money you have to invest.
Chris Linkas is the European Head of Credit for a Real Estate company. The company s manages over $70 billion in investments. The company specializes in commercial real estate, corporate loans and securities.