Is it good to start investing at a young age?
#finance #investment-management #accounting
21 answers
Tom’s Answer
It is a great idea to start investing as soon as you are financially stable (paid off credit card debt, have an emergency fund of 3-6 months of expenses saved, etc.). The biggest benefit to investing early on is the power of compound interest. This website (https://www.investor.gov/additional-resources/free-financial-planning-tools/compound-interest-calculator) has a neat calculator where you can see how much of a difference investing early on in your career can make.
Dana’s Answer
First, compounded interest allows for increasing value for paying interest on top of the interest you’ve already earned/been paid from previous years. The longer you invest (and keep the money in your account) the more opportunity there is to compound your interest. May sound obvious but wanted to put the term out there and I didn’t see anyone explicitly call it out or label it.
Second, another great thing about starting early is becoming familiar with investing. If you “lost” $1000 investing early and slowly but learned a lot about the types of investment options, fees, strategies, market performance, etc. then I think that’s a good ROI (return on investment) which can be refined over time.
Last, set aside a specific amount of money, come up with a strategy, work with your parents (as applicable) and try it out. Stick with your strategy for a set amount of time. Examine your results and try it again. I’d suggest sticking with a strategy for at least a year but probably 3-5 years depending on what you’re trying to learn. Best of luck!!
Alyssa’s Answer
Do you have more info on what sort of investments? As a general answer - if you have the funds and don't have any crippling debt, I think it's okay to start investing. I would probably explore low-risk options like a savings account or CD. If you're thinking about trading, understand that although there's a chance for a big return, there's also a risk of losing everything you have.
I agree with Alyssa. I think if you are able, it's ok to start investing. In addition to the advice from Alyssa, I think mutual funds are a good. A mutual fund is a mix of investments managed by an individual company. When you invest, you don’t choose specific stocks or other securities; the mutual fund does it for you. The inherent diversification of mutual funds makes them generally less risky than individual stocks, but there are mutual funds available at all risk levels.
If you have a job that offers a retirement savings plan, I would also encourage you to consider this as a way to invest, at least up to the point that your employer matches your savings. You will typically have investment options for those funds as well.
Colleen Kipfstuhl
Tony’s Answer
The short answer is yes. When you talk about investing, are you talking about the stock market, 401K type, CD's, IRA, real estate, etc?
Tony recommends the following next steps:
Vic’s Answer
Read the book "I Will Teach You to Be Rich" by Ramit Sethi.
West’s Answer
A few options for a new beginner -
Acorns App. This app will allow you to start investing in mutual funds with as little as $1 dollar. This is a very low risk investment and great for a beginner.
Robinhood App. This app will allow you to start investing in individual stocks with as little as $1 dollar. A little more risky than the mutual fund mentioned above.
Certificate of Deposit. This will let you invest money at a fixed rate which you can receive at a later date.
Hope this helps!
Vincent’s Answer
Hi Sergio,
Yes!! It’s never too early to invest. On my 18th birthday (minimum age requirement) I went to a Scottrade Branch and opened up my first brokerage account. Every paycheck I received in my summer jobs went right into the market (Just in Simple Passive S&P Index funds). This taught me how to save and grow my money. I still invest and have seen the power of market growth and compounding returns. I recently bought my first home (at the age of 26) and its largely because I invested as much money as I could into the market. Good luck and do your research!!
Daniel’s Answer
Setting yourself up for retirement is a great way to start, I suggest looking up and into what Roth IRAs, IRAs, and what a 401k is. Then I suggest opening up an account with a free brokerage company such as vanguard, charles schwab, or Robinhood and starting small with your investments in low risk stocks or ETFs. An ETF is a bunch of stocks comprised into one investment, so there is even less risk. I hope this is helpful but the internet is your best resource and you should research as much as possible.
Alejandro’s Answer
Anthony’s Answer
Rohit’s Answer
Tammy’s Answer
With all investing you do risk loosing your investment, but with budgeting and saving money (skip Starbucks) you could be on your way to financial independence.
Hsin’s Answer
Hi Sergio,
Yes, it is good to start investing at a young age. Investing at a young age allows you to use the power of compounding. There are many resources that explain what compounding is and how it works (for example, https://www.moneysmart.gov.au/managing-your-money/saving/compound-interest), but basically it is using money to earn money.
Keep in mind that you will also need to determine what to invest in, and you should be careful about who you give your money to, and costs of investing.
Hsin recommends the following next steps:
Michael’s Answer
Invest in your career and personality. Worrying about money and retirement have their place but can easily crowd what’s truly important. If you can keep your priorities straight then investing won’t be that difficult. You don’t know what the market’s future will be, nor does anybody else. You do know it is full of theives who will try to steal what you worked hard to earn, but they can’t steal a well honed skill or solid personality. Those are yours to keep, and can pay back much more than a flaky 401k can.
Kristy Scouten
Kristy’s Answer
Bill’s Answer
Kyle’s Answer
Julie’s Answer
Hi Sergio -
Investing at a young age is a great idea. It is important though to worry about your student loans and current debt as well as thinking about the future. If you are able to put a downpayment into a Roth IRA that has a significant interest rate, your money will grow on itself in that account. Adding little by little every year will help it build up over time. You do not have to invest in the stock market at a young age but investing for your retirement is very important. Good luck!
Michael’s Answer
YES. Start investing while you are young and have money to lose (you may not think it but you do)......find something or someone you believe in, learn about them, understand their business plan and invest in them - $5k today will not matter in 10 years unless it is worth $150k......take the risks before you have kids, house, etc.....your welcome to your 10 year older self.
George’s Answer
Douglas’s Answer
Yes it is! I am 58 and wish I would have started in a 401k early on. It's the easiest way to get your retirement fund to grow as most companies have a match on what you contribute. Not taking advantage of this is just crazy. And the cool thing is you still have control of where your money is invested. Most employees sign up, but don't go further in electing what funds their money is invested in, how much ROI they are getting on the investments, etc. Trust me, start as early as you can and it will be worth it when you are thinking of retiring!