Top 5 Reasons Why Investing Early Pays Off
Nowadays, lots of people foray into unfamiliar territory to derive monetary gains. These young, go-getting individuals desiring to achieve financial freedom have no qualms about immersing themselves to learn ‘how does investing work’ in a way that will double or triple their funds. They know that investing early has its advantages and they are not about to miss the money-making opportunities and other rewards that go with it.
Here are top five reasons why making an investment now makes a whole lot of sense. One does not even have to wait until one has a lot of money to start investing.
- It equates with financial preparation. Being financially prepared not only improves quality of life, but is also very crucial during unanticipated events like Covid-19. It also veers people away from perpetuating a cycle of dependency on parents or other family members when the going gets tough. One of the questions young aspiring investors encounters is “how do i start investing?” and the motivation to learn how to save and invest becomes firmer and stronger when they know that they are setting out to improve their present and future financial situation. Early investors can improve financial literacy through webinars, social media testimonials, emails, online forum and articles on investing money, and get good answers to questions like “how does investing work” from experts.
- The earlier a person invests, the sooner he develops a keen eye for investing smartly. Realizing why investment is important at a young age arms a person with knowledge and skill and lays the foundation for building a financially secure future. The main questions that come to mind are where to start investing and when to start investing. The 20s are regarded as the perfect time to start saving for the post-work years. Entrepreneur Noah Kerner was in his 20s when he co-founded the creative agency Noise, which catered to the young adult audience. Rather than taking the standard path, he brushed up his observation skills, developed a keen eye for investments, and put his money on new fast-growing startups. The entrepreneur has made several significant investments that has made many Americans speculate the Noah Kerner net worth as sizable.
What does this illustrate? It provides an answer to the big question, “what is one advantage of starting to invest as early as possible?” During the younger years, most people may have fewer responsibilities, and so with fewer financial obligations, they can save a hefty sum with every passing year, even when their earnings are still not that big. They can harness the power of investing early. Compound interest — the interest earned on initial savings and the reinvested earnings – is among the best reasons to start saving early. Simply stated, it is when the interest (for a sum of money that is invested) builds upon itself over time. Starting to invest early for retirement increases the benefits of compound interest.
- Discipline is created, and spending habits improve. By taking into account current and projected expenses, and setting aside funds not just for needs & wants but for making money grow, forward-thinking individuals who are able to invest early map out a clear path to success. When the person matures, and acquires more capital, chances are, they can exercise greater restraint, knowing the value of money, rather than falling into the abyss due to a lifetime of poor spending habits and impulse buying tendencies. Investing early ingrains valuable lessons, including good money management.
- It’s the digital age, and it has never been easier to begin investing early. There are apps, tools, and experts’ videos tackling ways and tips to build wealth and invest that can help individuals start investing early. Most young working professionals may start investing in stocks, and before long venture into very promising alternative investments, such as peer-to-peer (P2P) online investments. Having a diversified portfolio ensures that even when an investment class falters or does not generate the desired returns, another investment form cushions the effect. American investor, motivational speaker and author Phil Town suggests creating a budget and paying off debt first, then begin setting specific investment goals (including how much money to invest each month).
- When one sets out to invest early and often, he gains both tangible rewards, like profits, and intangible benefits, like patience. Look at the big picture: Making an investment now, and doing your homework/conducting arch on companies beforehand, you can more realistically beat inflation, gain the extra money with regular payouts, and reinvest it to generate even more money. Eventually, you may be able to work a lot less over your life. You can “make your money work for you,” as a successful investor who learned to invest early said, rather than working hard all your life to generate a moderate sum. Wealth managers describe it as “letting your money do the heavy lifting over time.”
Learning how to invest your money at a young age also leads to better risk management, apart from the financial gain. Among the intangible rewards are courage to pick oneself up and move forward, and patience. In stock market investing, there can be wild fluctuations in the share market. A newbie investor learns to see things out without panicking. The early experience helps shape him into a more rational person.
Lots of moderately conservative investors may choose to wait for the market to settle down. Truth is, no one knows for sure when that will happen. There are also very promising passive income opportunities out there. The stock market is not the only way to make one’s money grow. One of the safe investments for young adults is P2P. By putting a small amount of money away every payday into a micro-investment platform, it can accumulate or add up to a large amount and cover not just needs & wants but an emergency fund.
It is high time you stop sitting on the sidelines, and not being “in the game.” You can proactively shape your future through early investing, beginning with channeling a small sum of money each month to a reliable platform. A good example in the Philippines is Blend.ph, a trusted P2P funding platform which offers the opportunity to earn as much as 30 percent per annum.
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