It’s tempting to avoid investments during your twenties. There are so many things you want to buy and spend on, so you may not always prioritize the future. Don’t fall into the trap that so many others your age are victims of. Most of those in their 20s use their credit cards, acquiring debts more than savings and investments.
People often advise young adults to save, but savings are stagnant, while investments have the potential to grow tenfold. There are many benefits to investing your extra funds instead of spending them.
Here are some of the reasons why you should invest your money while you’re still in your 20s:
1. You still have fewer needs than wants
During your twenties, you have lesser bills to pay. If you’re still residing with your parents or you are unmarried, you have the benefit of having extra money. You might be tempted to buy the latest gadgets or go on a trip instead of letting that extra cash grow. Investment is a better option than the choices mentioned above.
You can check out the Stratford Management Inc reviews of investing opportunities for beginners and young adults. The great thing about entrusting your hard-earned money to tenured professionals is that they will know what to do, and where to invest.
2. The power of compound interest
There are fixed investments that allow you to earn a certain percentage over time. To illustrate this, imagine that you’re investing $500 in a company that gives you a 30% annual return at the start of your twenties. After a year, you get $650; after two years, you will have $845; in the fifth year, you will have made over three times your initial investment at $1,857.
If you don’t touch your money for ten years, you will make $6,893 by the time you’re 30. You get a profit of $6,393 from your initial $500 with an annual compounded interest of 30% for a decade.
3. Successful investments will allow you to retire early
One motivation for investing in your twenties is that you can earn enough money to stop working in your forties or fifties. Like planting a seed, you can let your investment grow on its own until you need to reap its profits. Isn’t it exciting to think that you will get enough money to retire by investing while you’re still young?
Set a goal and slowly work your way towards it. You can even aim as high as $10 million if you think that you need it’s enough money to retire on. The important thing is that you are smart about your investment choices, and you’re not afraid to rely on experts when necessary.
Financial literacy is a vital asset to equip yourself, and you should start in your twenties, an age when you have lesser worries. Prioritize and diversify your investments so that you can adjust your portfolio accordingly. There are many financial firms available if you’re looking for professionals to help you with finances.