Why You Should Start Investing Early

If someone says the benefits of investing early are a myth, you can leave the room without letting them complete their thought, it won’t be considered rude. Or you could try and explain to them why they must be out of their mind to believe that.

Ever wondered why Bill Gates’ net worth reached 1 billion dollars when he was 31 years old and at the age of 64 today, it’s well above 100 billion dollars?

It’s because you need to put your money to work to make more of it. Compounding is this magical concept we were given by the angels. Remember geometric progression and how it makes graphs steeper and steeper, that’s what you need to do with your wealth. Investing early is all about letting your money grow exponentially as soon as you get it. So that on that later date you were planning to start investing, you have more money to play with. If you don’t invest early on, you’re basically saying no to free money. (And it is just as absurd as it sounds.)

Here’s a thread we did on compounding to better explain the concept.

By investing early on, you allow yourself to make the mistakes you’re bound to make whenever you start. No one is born with a knack for investing. People learn it just like a language and while they fumble and stammer a lot initially, they continue speaking it, because that’s the only way to get fluent. Investing is no different. The earlier you get to it, the better you’ll be when you have some serious paychecks coming in. And at that time, when the stakes are higher, it will be foolish to start exploring how to invest. Learn from your mistakes when you’re allowed to make them.

There’s plenty to pick from

There are tons of investing opportunities available. Some people deal with stocks, some choose mutual funds, some stalk cryptocurrencies, while some trade real ones. There’s also real estate, bonds, and direct lending. And if all that wasn’t enough, you have Contracts For Difference and investing in art and private equity.

Apart from showing off, the purpose of listing these down in a paragraph is to tell you that there are plenty of options at your disposal. They are all open for you, but some of them might not satisfy your risk appetite while some are too complicated or need to be managed actively. By starting to invest early on, you can devise a plan tailor made to your needs because if you don’t want to look at the graphs and indexes every day, then please don’t force yourself to do so. Passive investments made via mutual funds work just fine too. Pick mutual funds or lend your money.

Investing doesn’t need to be a headache or intimidating by any means, but we make it that way because we choose to stay uninformed. Only when we start reading about the different possibilities, and mess around with each of them with dummy money, can we find the method of investing that suits us the best. So start now, when you have the mental capacity of understanding yourself and the options on offer.

Make investing a habit

It’s easy to fall in the trap of spending your complete salary or allowance. Such that when you’ll be required to start setting money aside for your retirement or your new house, you’ll struggle to make ends meet. That’s why the habit of saving (and investing) needs to be developed in your teenage years. Disciplined spending habits will ensure that later on in life, when your expenses and responsibilities are increasing, you are able to save an adequate amount. Also, the earlier you start saving, the lesser you have to save. Here’s how:

Have you heard of financial emergencies? They exist, but the sad part is, you will dismiss their existence till the day you have one. Don’t let such monetary emergencies hit you in the face when you’re least expecting them. Create a cushion to soften the blow. The more you set aside early on, the more prepared you are for this simulation of uncertainties we call life.

To end things on a positive note, have you thought of what your life will be like 20 years from now? You know, when you’re stuck at a job you hate but can’t quit because you never invested to create a pool of funds that grants you the luxury of finding something you enjoy doing?

Don’t fall into that well of despair. Invest early.

Help your teen kick start their financial journey with a smart money app and membership to an exclusive club of the smartest teens in India and SE Asia. Get Yodaa today.