Make Money Work For You: Why You Need To Start Investing At A Young Age
Growing up in a household where one parent worked as a financial advisor, dinner table conversations revolving around stocks, bonds, 401(k)s and the like became something of a norm for me.
As high school rolled around, I decided to make the leap and purchase my first stock sophomore year with the savings I had accumulated throughout the years. Retrospectively speaking, I had no idea what I was doing. I knew two things at the time: 1) Some large companies had stock, and 2) Owning a stock meant owning part of the company. With that, my journey in investing began.
Fast forward a little over half a decade. With a bookshelf of finance books read, a few years worth of relative experience, co-founding an investment club (shout out Cal Poly Investing) and a number of personal investments later, I'll admit I'm still no expert in investing. I mean, really, who in their 20s is a master at anything?
What I can confidently argue, however, is why you should start investing, no matter how young you are or how little you know about finance. Now, I know what you might be thinking: "I don’t have any money to invest" or "I don’t even know where to start."
Well, my friend, everything begins with the first step. If you don’t have any money to invest, tuck away small amounts on a consistent basis (ex: $50 every two weeks) and soon, you will have saved enough to be able to make your first investment.
If you don’t know where to start, start by reading one finance related article every day. Yahoo! Finance is always a safe bet for the general public. Build small goals for yourself, like to read one article every day for a week and then build on top of that by increasing the number of articles. As you continue reading, you’ll begin to understand the landscape of the financial world.
Why should you start now, you ask? While there are countless reasons why you should start investing now, here are a handful of the most important ones:
The Experience
Even if you have miniscule amounts to invest, go ahead and start anyway. If you lose a few hundred bucks, it's not a big deal. The most important thing is the experience of learning how to invest. Think of the long term. The risk of losing a few hundred bucks now is a small price to pay in learning how to make a fortune down the road.
Time
One of the financial industry’s most important concepts is time itself. Without it, investors and analysts would lack the necessary signals to valuate any financial security. The basic premise is that by foregoing spending your money now, you’ll reap the benefits of your investments later down the road. Time is money and money is time. The reason for that is compound interest, the earning of interest on your interest.
The more time you give your investments, the more they will grow.
You
It's your life and your finances. Mom and dad aren't going to be there forever to bail you out when things get rough. No one is going to hold your hand and teach you how to invest, save for retirement or try to build a fortune. At a certain point, it's time to take responsibility for your own life because at the end of the day, who else will? The sooner you realize this, the better.
With that said, it’s about time you take control of your finances and your life by investing. Make your money work for you, rather than you for it.
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