Invest in Your Future: Why You Should Begin Investing Early

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You’ve heard the saying the earlier the better when it comes to just about everything, but this especially applies to investing. If you start investing as early as possible, you will be in an excellent position to reach your retirement goals, even if you can only invest small amounts at first. Here are some reasons why you should begin investing as early as possible.

The earlier you start investing


When you’re young, it can seem like there are so many other more immediate needs to consider. Whether that means paying for school or saving for a home, it’s easy to think investing is something you can put off until later.

However, if you make small investments as early as possible, compound interest can do wonders. Let’s take a look at an example of how compounding interest works and how making small investments early on can make all of the difference later in life.

The younger you start, the more time your investments have to grow


Even though you may be young and don’t have much money to invest, starting early is critical. If you begin saving and investing as soon as possible, your money will have many years to grow.

Since compound interest is a powerful force, just a few years can make a huge difference. Let’s say you invest $10,000 at age 20 with an average return of 8 percent per year. By age 30 that investment would be worth more than $28,000!

Investing builds financial literacy


The earlier you begin investing, and more frequently you invest, the sooner you’ll see returns on your money. But there’s an even bigger benefit to investing early—it also helps teach financial literacy, a skill that sets graduates up for lifelong success. Here are a few tips to help get started.

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How much should I invest?


It’s no secret that saving for retirement is one of your most important financial goals, but how much should you be saving? It might seem a bit overwhelming to determine just how much you need to save each month, but there are many calculators and apps available online that can help.

Which type of investment is best for me?


As with most financial decisions, there are a lot of options when it comes to choosing what type of investment is best for you. A lot of it depends on your goals and risk tolerance, so you should choose an investment based on what will help you accomplish those goals most effectively.

To find out if investing is right for you, consider answering these three questions. Which type of investor are you? Are you willing to take risks? How much time do you have?

What if I can’t afford it?


If you can’t afford to begin investing right now, don’t worry. Start by saving 10% of every paycheck until you have $500, and then start investing in a Roth IRA or a mutual fund. If your employer offers a 401(k) plan with a match, be sure to contribute enough to get that free money!