Here’s why you are a smart investor if you invest at a young age
One is never too young to start investing. It may seem too big a dream to invest in a property at an early age, but the benefits far outweigh the disadvantages. Of course, when making such an investment, you would also need to plan ahead to ensure that you have the necessary funds to afford such an investment. However, should you have the means to do so, you should consider investing at an early age. Why should you invest early?
Time allows risks
When you start young, you have more leeway when it comes to taking risks. In the event of a failed investment, you still have more time to bounce back from it compared to when you’re older and more cautious about taking risks due to age.
Compounding returns
If you keep investing using your investment earnings, in the long run you will see that you have exponentially increased your return on investment. This is the powerful part about using time to add value to money. Whether it is using regular investments or retirement savings, all investments will eventually have compounding benefits.
Spending habits improve with discipline
When you invest at an early age, you will develop a disciplined way of spending since you have to focus on budgeting and cutting unnecessary expenses when you need to. This builds your resistance to impulse buying, and eventually you will see the fruits of your restraint when you have more capital to work with.
Quality of life
By investing early in life, you won’t be forced to make risky decisions later in life in order to secure a stable retirement. You would have less stress, and a larger pool of savings to work with. Even when you don’t do any other new investments later in life, you would already have saved a decent amount to ensure a stable retirement.
Personal finances improve
Although at a young age you might have to be frugal in spending, but it pays off later in life. Your investment would have grown exponentially and you will be able to afford things that your peers may not. Your savings will also help you when you are facing tight financial times throughout your life.
So now that you are thinking of investing at a young age, what can you invest in? Here are some investments you might want to consider as early as your 20s.
Retirement
One of the best retirement funds is compulsory, dictated by our government- the EPF (Employees Provident Fund). This is one of the ways to prepare for your retirement, so to reap this benefit from your employer is one of the best ways to prepare for your retirement. However, should you think that you would want more in the future, you can always invest in other retirement funds such as investing into blue chip bonds and common stock.
Property
Real estate is one of the most popular investment and you should take advantage of your young age to get an early start. In fact, some successful young people saw the value in investing in property at such a young age that they actually bought properties, and rented them out to help them with the mortgage. Of course, you also have to take into account the current property market rates and your cash flow to manage your investment, but traditionally, property investment is one of the safest investment to make.
Emergency funds
Also known as short-term investments, there are some alternatives to make some extra money for your idle cash. This type of investments such as short-term certificate of deposits, money market funds and savings accounts can provide you with some emergency fund when you need it in the near future.
