When it comes to investing in your future, it’s never too early to get started. As overwhelming as it may seem to create a retirement account when you’re in your 20s, the reality is that the earlier you start saving, the more financial security and peace of mind you can enjoy later on.
Still not convinced? Explore just a handful of the many reasons to begin investing sooner rather than later, as well as advice for choosing the right Tucson finance specialist to help you get started.
The earlier you start investing, the more compound interest your investments will earn. Specifically, compounding interest refers to interest that earns additional interest on itself.
With even just a 5% interest rate, for example, a $10,000 investment made at age 20 could grow up to $70,000 by the time you retire—compared to less than $45,000 for the same investment made at age 30. What a difference!
Many young people have trouble getting into good financial habits, especially when they have significant disposable income for the first time in their lives. When you start investing early on, you can learn more about the investment world and make more responsible choices for your money. These choices will work out in your favor—and when you get into these habits early on, they’re easier to stick with as you get older.
This isn’t to say that you should get too risky or reckless with your investments while you’re young. However, the reality is that your tolerance for risk is much greater when you’re investing at a young age. Even if a recession hits, for example, you’ll have much more time to “ride things out” than somebody who didn’t start investing until they turned 40.’
For many people, living expenses increase with age. When you’re fresh out of college and have just landed your first “real” job, you may have student loan expenses and rent to worry about—but your expenses are probably as low as they’ll ever be.
As you get older and if you choose to buy a house and/or have children, for example, your costs will increase. With this in mind, it makes a lot of practical sense for you to start investing early when you have some extra money to spend.
These are just a few of the many reasons to get into investing at a young age. And you don’t necessarily have to invest vast sums of money to get a significant head start on your retirement savings.
Not sure where to begin with your investments? A financial advisor can provide you with the personalized guidance you need to make smart decisions now and in the future. Based in Tucson, Arizona, Greenberg Financial Group is here to help; contact us today to get started!
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