“Do something that your future will thank you for.” – Anonymous.
One of the best things you can do for your future is to start investing. While this is commonly known, young people have always been skittish about it. When asked why, they will say, “I want to invest, but I don’t have enough money right now.” This statement is misguided, and if you believe it, it could cost you financial independence later. Investments come in different forms, including business, stocks, bonds, pensions, private equity, unit trusts, and real estate. All you have to do is find a suitable one and start with the resources you have.
But you are young. This is supposed to be the most carefree time in your life. Why should you burden yourself with extra financial obligations by investing? Here are a few reasons:
Investments make you money. The earlier you start, the more you stand to gain. This is due to compound interest, something Albert Einstein once called the “most powerful force in the universe”. Here’s how the magic works: when you invest your money, it earns interest and appreciates. The next year, you earn interest on your original capital and the interest from the first year. In the third year, you earn from the capital and the interest from the first two years, and so on. On the other hand, if you put off investing because you want to start when you have more capital, you will not make as much. Furthermore, investing gives you a hedge against inflation. So, instead of leaving money to lay around because you think it is “little”, go ahead, invest it and take advantage of compounding interest.
Investing early gives you more time to make mistakes, learn from them and become a pro at it. Younger people generally have a higher risk appetite and fewer financial obligations. This means you have a cushion to experiment, figure out what works and start to earn. By the time you are older, you will have grown into a savvy investor. More importantly, higher risk has the potential to bring higher returns.
Investing now gives you the opportunity to diversify your sources of income so that you are not just depending on your job or business. Think of it as a side hustle. You could have your regular income and extra income from your investments, which can be quite lucrative and gives you a safety net if your primary source fails.
Yes, you are young and carefree, but financial discipline is a crucial habit you must develop if you want to secure your future. Making investments will help you track your spending habits and be accountable for how you manage your money. It also counters impulsive or frivolous spending.
All of us crave a future that is financially stable and free. One of the ways you can achieve this is to invest now. Knowing that you’ll be able to pay your bills, take care of your family, meet your daily needs and afford the lifestyle you desire will give you peace of mind. With all these benefits, what you are waiting for? Don’t fall into the trap that you can do it later. Find an investment product that is ideal for you and invest!
By Mitchel Lumatete, Cytonn Investments