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Why it is important to start investing young.

Whether you are just turning 18, going to university, or just starting to read this blog, educating yourself and investing now is the best course for a more secure financial life. Investing at a young age may seem scary initially, but if done right, you will benefit from it and have a more prosperous financial life. Keep reading to understand why you should and how you can start investing today!


A guy looking at stocks on his phone and laptop

Long term versus short term

Understanding your investing goal is the first step to preparing. Short-term investing is when you plan to use your investing funds in under three years. Short-term investing usually consists of high-risk, high-reward investing. Most financial advisors do not suggest short-term investing because it is very aggressive with the chance of losing. Furthermore, it limits how much one could benefit from the investment. Pulling money out early may risk any potential earnings, and because the stock market, on average, always returns over time, you are likely missing out on money doing short-term investing.

However, if short-term investing is your goal, it is best to do it wisely. Invest in companies you researched and are aware of. Ensure you are investing in a company with a strong advertising campaign, good product, and a productive work ethic among workers. You must look for signs to ensure the company's success in a short time. Never invest blindly if you do short-term investing.

Long-term investing is the best form of investing possible. Long-term investing is much less risky than short-term investing and yields higher rewards over time. While you should still educate yourself on investing first, investing long-term is more beneficial, less risky, and more accessible than investing short-term.


How to invest!

Many apps provide access to investing in stocks, ETFs, Crypto, and more. When investing, you want to practice asset allocation (balance risk and reward by investing in various assets). Only invest some in one area or one stock. Why? If the market in a specific area begins to crash, you may lose out. It's too risky. However, the chance of the market crashing at once is very unlikely. Therefore, investing in various assets (mixtures of stocks, ETFs, etc.) is necessary.

Invest in index funds! Index funds are assets designed to match the market. On average, the market increases by 8% every year in 5-year intervals (you won't see the result until after five years). Index funds are designed to match that, so if you invest in index funds, you will likely reap the rewards of your investments after five years.

Invest aggressively for more funds over time. Invest in the most aggressively that you can do. If you can only invest $20 a month after spending money, then invest that much. However, if you can invest more, invest more. This will ensure that you receive more of a reward over time. I suggest investing at least 15% of your income every year. So, if you make $20,000, invest at least $3000 over the year. You will be happy investing so aggressively; it will return in returns you appreciate.


Stocks

Why now?

As you invest over time, the money compounds and grow exponentially. For example, let's say you invest $3000 a year and you receive the average market return of 8% every year. Following this table that we are going to present below:


input

output

reward

year 1

$3,000.00

$3,240.00

$240.00

year 2

$6,240.00

$6,739.00

$499.00

year 3

$9,739.00

$10,518.00

$779.00

year 4

$13,518.00

$14,599.00

$1,081.00

year 5

$17,599.00

$19,006.00

$1,407.00

year 6

$22,006.00

$23,766.00

$1,760.00

year 7

$26,766.00

$28,907.00

$2,141.00

year 8

$31,907.00

$34,459.00

$2,552.00

year 9

$37,459.00

$40,455.00

$2,996.00

year 10

$43,455.00

$46,931.00

$3,476.00

You'll see that you get back $16931s when you add all your rewards. That's $16931 (excluding tax), which is extra dollars you can use. You can buy a car with that money. You would earn this by investing $3000 a year, that's $250 a month. You spend more on fast food and clothes than that. So, what would happen if you invested $500 a month, which is $6000 a year? Well, after ten years, you would receive $33,818 in reward! That's a year's rent or a brand-new car. That is money that you did not need to work for. If you started investing $500 a month at 18, you would have $33,818 in extra money to spend at 28. Remember that you didn't spend the rest of your money in your investment account. So, at 28, you would have at least $93878 under your name that you can choose to either keep investing or spend. That's a significant amount of money. Investing today will be in the best interest of future you. These numbers don't lie! It is important to start investing young!



Conclusion: Why it is important to start investing young.

This is why it is essential to start investing young. You make a difference for future you that will appreciate your efforts. You earn extra money by investing, and it isn't as risky as things such as gambling, which is designed against you. You don't need to work for the extra cash; investing young gives you more potential to grow your money because you have more time than people who start investing at an older age. Imagine if you invest over 40 years. You'd be a millionaire in your 50s, assuming you started at 18. Why wouldn't you want that? Some people never become a millionaire in their lifetime. So start investing to make a difference in your future today! You won't regret it!


Woman looking at her phone for investing

Thank you for reading our article, provided by Survival Wolves Official LLC.  If you have any thoughts, questions, or criticisms of our review that you would like to share, please leave them below in the comment section!

"Get your paper up!"- Survival Wolves Official Team!

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Minerva
Minerva
Apr 04

Nice explanation— even for people who don’t understand everything can get the gist of this.

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