Advantages of Investing at an Early Age

There are a lot of numerous young adults who have decided to begin investing while they are still young though, not everyone has the same mindset. There are still a majority of young adults who decide to put off investing until they think that they are, theoretically, more stable financially.

Read more on the introduction of investing here.

Still, it’s important to note that even at your 20s, you already are in a prime position to join the investing world, even when still faced with college debts and low salaries.

Here are some of the reasons why investing in your 20s can actually play to your advantage.

Taking on more Risk

With age being a huge factor in influencing the amount of risk you can actually withstand, this is a clear advantage seeing as investment – no matter what kind – will have risks involved.

You can still learn more money with more years ahead of you and can therefore afford to make minor mistakes sometimes, especially since you’re still a beginner and do not yet have a lot of experience in investing. People who are nearing their retirement years usually end up gravitating towards low-risk or risk-free investments like bonds and certificates of deposits (CDs).

As a young adult, you have the opportunity to build more aggressive portfolios with higher volatility. This also means that you stand to gain more.

Time is a Friend

While money might still be tight, time is a factor that you can fully utilize to your advantage. Compounding will allow you to generate wealth as time passes; this only needs two things to be done: reinvestment of earnings and time.

With a 5 percent interest rate, investing $10,000 at the age of 20 will be able to grow to $70,000 once you reach 60 years old. Doing the same at the age of 30 will yield $43,000 by age 60, and if made at the age of 40, you will only reap $26,000.

The longer time you put your money to work, the more wealth it will generate in the future.

Tech Savvy

Being part of the younger generation will typically mean that you are more confident and can work with almost any type of technology with little to no effort.You have the capability to research, study and apply online investing tools and techniques with a simple click or tap on your device.

Majority of the trading platforms are found online nowadays and they provide you with numerous opportunities for both fundamental and technical analysis. There are also chat rooms, as well as financial and educational websites that can guide you during your investing journey.

Technology, which includes online opportunities, social media, and apps, can all add to your knowledge base, experience, confidence, and most importantly, expertise.

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