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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