Investing early in your career is one of the most important things you can do, no matter what you want to do with your life. Making mistakes in college and just learning to be an adult is hard enough without having to worry about saving up money to invest as well, but it’s important to get that started right away so you have extra money later on in life when you really need it. Here are four ways investing early will help you later on in life and how to get started today!
What's Important About Investing
Many people will tell you to invest early. They say that the earlier you start, the better off you'll be in the long run. But what does investing early really entail?
Investing early means starting to save your money now so that you can reap the benefits later on. Investing early gives you more time to gain interest and grow your investment, which ultimately means more money for you down the road. It also allows you to establish good saving habits at a young age. You're not going to want to stop after just a few months or years - but if you start when you're young, it's much easier to keep going!
When to start
Students should start investing early to secure their financial future and build a diverse portfolio that will help them reach their long-term goals. Starting as early as possible provides time for compound interest to work its magic. The earlier you start, the more time you give your investments to grow. For example, if you invest $5,000 at age 18 in an account with an average annual return of 8% it would be worth $18,000 at age 25. If you wait until age 25 to invest $5,000 it would only be worth about $8,400 after 18 years with an 8% annual return.
How to start
Young people don't often think about investing their money, but it can be one of the best things you can do for your future. If you start saving early and invest wisely, you'll have more options in life. You'll be able to take more risks and try new things without being afraid that you might lose all your savings. And if you're lucky enough to win the lottery or inherit a fortune from a relative, your investment will help protect the money from inflation so it will last for generations.
Strategies to use while investing
1. Open a Roth IRA
2. Buy index funds, such as Vanguard Total Stock Market Index Fund (VTSAX) or Fidelity 500 Index Fund (FUSEX)
3. Save up for retirement by taking advantage of company-sponsored plans
4. Use an automated savings plan to take advantage of compound interest
5. Open a 529 college savings plan for future education costs , invest in your company’s 401(k), and invest in stocks with a low cost, high return. Do not put off saving and investing for too long because the earlier you start, the more money you can earn from compound interest over time.