It’s Never too early to start Investing
Just because you’re young, even as young as 12, doesn’t mean you can’t start investing. If you can read a book, then you can read a book about the stock market. If you can read a book about the stock market, you can learn how to invest in the stock market, and so on and so forth.
It’s never too early and you’re never too young too start investing. Okay, maybe that’s pushing it. Two years old is a little young. As a teenager, an early start in investing can only be an advantage.
1. Time equals money.
One huge advantage you have by starting early is time. I know I’m jumping quite a bit ahead right now, but let’s consider retirement.
If you start investing and saving for retirement at age 30 and you save $2,000 a year in a 401K for 35 years until you retire, if you get an average 10% return you will have just under $600,000. Okay, that sounds pretty good, but maybe you’d rather spend some of that $2,000 a year on something else?
Now let’s say you invest only $1,000 per year, but you start investing at age 20. That would give you 45 years until you retire and about $780,000. You’re saving half as much as before and you actually make more! If you kept saving $2,000 you’d have over $1,500,000!
I used 10% as an average stock market return, but the market it so unpredictable. You could get a lot more or a lot less, buts that’s why this is an average and over 45 years, I think it’s plausible.
2.Take more chances
By starting early, you have more time to fix your mistakes so you can afford to take bigger risks. If you lose everything you have at 25, you still have 30 or 40 years to save, invest, and fix your mistake.
As you get older, you may want to shift to a more conservative portfolio, but if you’re young you can take bigger chances. Someone at age 60 is going to have a harder time reclaiming a $25,000 loss than someone at 20 because they have less time.
3.Learn now, not later
Let’s say that two people are applying for a job at an advertising agency. The first has a bachelor’s degree in marketing and business administration and the second has an associate’s degree in history. Assuming that everything besides education is the same between the two, which do you think will get the job?
I would much rather hire the person who knows a little about marketing and business because they are probably going to do a better job. This will go for anything. Someone who knows more about something is, more often than not, going to do better.
If you start learning about investing and testing it out when you’re a teenager and when you’re only investing a small amount, you will already know how it works when it comes time to start saving for retirement. This goes back to the extra time.
The person who knows nothing will have to take the time to learn what you know before they can even hope to do as well as you. Even though you never know what the markets are going to do, experience and know how should help.
Ultimately, starting to invest at a young age will only be to your advantage. You’ll thank yourself when you’re ready to retire. Maybe you’ll even retire early?
