Essential benefits of investing young
“When you invest, you are buying a day that you don’t have to work”.
Aya Laraya
When you’re young and starting out on your career, investing is probably the last thing on your mind.
It probably seems far too premature to be thinking about retirement or any future funds when you’re just managing to make rent or looking forward to booking a weekend away with friends. You probably have more interest in buying those wireless headphones you’ve had your eye on for months, than researching interest rates and saving accounts.
In the long run however, would you rather be enjoying even more weekends away in your retirement years, or still working 9-5 because you just didn’t consider investing?
Research suggests an investor in their early twenties could be three times better off than those who left it until later in life to start saving. 1And many investment routes nowadays don’t need to leave a hole in day-to-day spending, so you can still budget for those dream holidays, whilst making sure they continue into later life!
some ideas to get you started
Investing young has many, many benefits, but here’s just a taster of what putting away those pennies could help with:
A less stressful retirement
With the cost of living seemingly only ever on the rise, the idea of early retirement seems to be more and more of a pipe dream. However, if you start investing early you could have a good sum of money available for when you retire, as a result of your money potentially growing year on year. Having time on your side means a longer time to save and benefit from these savings and the interest they build. You never know, it could even lead to an early retirement!
Benefit from Compound interest
Compounding returns can be extremely powerful over the long run. The earlier you get started, the greater your chance is to take advantage of this. Simply put, this is the power of the time value of money. Regular investments in portfolio, or a retirement account can lead to huge compounding benefits. Sit back and let compound interest do the hard work.
Transform small amounts into large
It probably feels a stretch to even think of putting aside any of your starting salary when there are bills to pay, nights out to attend and food to buy. However, every penny really does make a difference, so even as little as £50 a month could bring in more interest than probably expected. Products such as an ISA from i-stock have the flexibility to put aside small amounts of money regularly, or just when you feel more comfortable to do so. If you get used to putting a little sum away in an investing account, you really will be living your best life when you’re older.
Improved spending habits
A benefit often overlooked, but by putting away even a small amount each month is sure to have a positive effect on any spending habits. Investing teaches important budgeting lessons that are always good to learn and managing that extra £50 a month saving could soon become second nature.
Take the risks while you are young
Investing early provides you with a safety net allowing you to take bigger risks later in life. You’ll have a secure nest egg that will continue to grow, allowing you, as time goes on, to feel more comfortable taking time off the 9-5 and even splashing out on the worldwide trip you’ve always dreamed of. It also provides you with some financial security if an emergency was to arise, or even lead you to pursue your lifetime passion.
Investing may be a daunting experience, but once you invest your first sum of money – large or small, you won’t turn back. Having time on your side means a longer time period of being able to save money to invest and more opportunities to find investments that can increase in value.
It is important that you do a bit of research before you start investing, just to make sure you choose the right investment account for you. Make sure to consider the rise and falls of the markets, but wouldn’t it be great to be relaxing on a beach in your older years, thanking your younger self for resisting those wireless headphones.
In these days of austerity in addition to relative stress about running into debt, some people balk about the idea of making use of a credit card to make acquisition of merchandise or perhaps pay for a holiday, preferring, instead to rely on the actual tried plus trusted approach to making transaction – raw cash. However, if you possess the cash there to make the purchase 100 , then, paradoxically, this is the best time to use the credit card for several factors.
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