Why Invest Early?
# Student Sector # Lifestyle # Life Hack

Why Invest Early?

post by David Blog

by David Blog

Aug 26, 2019
at 10:48 AM

Hey guys, most of you are like me, between 20-30. This is the best time to start investing, you may be wondering why, but here are 5 advantages of starting to invest early!

 

 

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Time

Even if you don’t have money, as a young adult you have time advantage.

  • There is a reason that compounding investments, which is the ability to grow an investment by reinvesting is thought to be a magical thing by many rich successful investors in this world.

  • The magic of compounding allows investors to generate wealth over time, and only requires two things, the reinvestments of earnings and time.

  • For example, a RM10,000 investment at 20 years old would grow to RM70,000 by the time they were 60 years old based on a 5% interest rate.

  • If they only invested the RM10,000 at 30, it would only be about RM43,000 at 60.

  • Therefore, the longer money is put to work, the more wealth it can generate in the future.

     

     

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    More Risk

    An investor’s age will influence the amount of risk he or she can take.

  • Young people, with many years of earning ahead of them, can afford to take on more risk in their investment activities.

  • Individuals who are older may go for low-risk or risk-free investments because of the limited amount of time and income they have left.

  • Thus a younger person can potentially earn much more in investments due to the ability to be able to take more risks!

     

     

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    Learn by Doing

    Young investors have the time and flexibility to study investing and learn from both successes and failures.

  • Since investment has a fairly lengthy learning curve, young adults are at an advantage because they have years to study the markets and improve their investing strategies.

  • With the increased risk that can be absorbed by younger investors, they can afford to make mistakes because they have the time needed to recover.

     

     

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    Technological Knowledge

    The younger generation is a tech savvy one, they can study and research online investing tools and techniques.

  • Online trading platforms provide countless opportunities for both fundamental and technical analysis, as do chat rooms and financial and educational websites.

  • Technology can contribute to a young investor’s knowledge base, experience, confidence and expertise.

     

     

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    Human Capital

    Human capital is basically the present value of all future wages.

  • Since the ability to earn wages is fundamental to investing and saving for retirement, investing in oneself is a valuable investment with strong returns.

  • Young adults often have many opportunities to increase their ability to earn higher future wages, and taking advantage of these opportunities can be considered one of the many forms of investing!


     

    So, if you want to be rich in the future, now is the time to start investing, and learning how to invest. If you don’t know how, there are many online platforms to learn from and also you can make dummy accounts, and practice with 100,000 USD so you understand the market and not make any losses!