Dear 20-something Peeps: Three Best Reasons to Start Making Early Investments

Invest early, get rich early. This is one advice we often hear from the financial pros and successful people around the world. While it is true that the earlier you start with investing, the more time you have to grow your investment. But like all good things, this is easier said than done.

Why Choose Your 20s (or Earlier) to Start Investing?

For most young adults, their mindset is to enjoy their younger years and live for experiences all the while paying for their bills. This is since the priorities of a 20-something are different from those who are already in their 30s, 40s, 50s, and so on. But the earlier you plan for your future self, the more you realize how expensive it can get.

Everything increases in price each year, be it gas, food, housing costs, or the little luxuries you enjoy like Netflix. If you make the best use of your money while you are still in your early 20s, then start investing asap. Need more reasons to invest at a tender age? The following might be enough to change your mind.

  • You can leverage compound interest. Compound interest is simply the term used for any interest you can gain for reinvesting what you earn. The earlier you start investing, the more interest your interest earns. This allows you to exponentially build your wealth.
  • Life is a lot less expensive. Admit it or not, your expenses in your 20s tend to be lower than when you reach your 30s. You could be renting along with your best buddies in your 20s, splitting the bills, and only paying for your own gas and food. But once you reach your 30s, your expenses can go up nearly three times or more. If you start earning in your 20s while expenses are lower, you will have more funds to shed and more time to grow your investment.
  • You will learn how to improve your spending habits earlier. Most people in their 20s don’t know how to make the best use of their money just yet. Many are living from paycheck to paycheck with little-to-no savings. The earlier you join the investment wagon, the earlier you can form better money habits.

What Investments Are Best for People in Their 20s?

young woman holding a home miniature

One can choose from a wide variety of investment options. But for starters, you can consider the following.

Real estate is one investment you will surely want in the future. So why not say goodbye to renting forever and instead buy your own home early? There are lots of resources both online and offline that offer free real estate tips for young buyers like you. As early as now, you can start saving up for your home’s down payment. When the time comes that you have a stable job, have a high enough credit score, and can basically afford and is eligible for a mortgage, you can start living a more stable life of a homeowner.

Higher education is another investment worthy of your hard-earned cash. This can help you begin a new career, step up your current role, or pursue occupational pursuits that require a degree. Even if you can’t afford college tuition, you can try looking for local scholarship grants. You can even find some degrees offered online so you can start learning remotely without having to leave your nine-to-five job.

Debt elimination is a good investment idea if you already have a considerable amount of debt under your name. If you want to start building your wealth, then you should not forget to pay off your debts. Any unpaid debt you have will continue to accumulate interest. Starting eliminating your debt and if you can, try to live a debt-free life in your 20s.

Your retirement may still be at least 40 years away, but why wait until you are in your 30s before saving up for retirement? This type of long-term savings will help you start planning for the kind of retirement you want to experience in your senior years. 401(k)s and Individual Retirement Accounts are among the best retirement savings funds you can invest in.

What responsibilities you have in your 20s and the things you need to pay for during this age won’t compare to more expensive costs in the future. This is why it is time that you consider taking in investments at the earliest date possible. Set yourself for a brighter future by making the right choice. Invest in things that matter to you the most and evaluate your current situation. If you take the leap early, you can enjoy the rewards earlier and reach your investment goals even before you reach your senior years.

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