Why? The answer is easy; the sooner you begin saving & investing, the more time your money has to grow. So start today, and reap the benefits of watching your contributions multiply over the course of your working years. This phenomenon is called compounding interest. For example, if you invest $1,000 at ten percent interest per year you will have $1,100 at the end of the first year. The more you contribute, the more interest earnings you will receive year after year. Initiating the start of your investments today can help you begin to reap the rewards for your future. So start the process now, and you will thank your younger self much later.
If you think this feat is impossible, I understand; you’re young, and retirement is the last thing on your mind. After all, you are currently paying off college debt, car loan, rent, and you believe there will be plenty of time down the road to save for retirement. Hold on, remember how compounding interest will help you multiply the money you invest? You really don’t want to miss out on this rewarding opportunity.
So how can you manage to save as well? It may not be easy to forego life’s pleasures, such as regular dinners out with friends, impromptu weekend adventures, or that amazing four-day music festival. But with a little sacrifice and determination, you can start saving today. Check out our website on “Four Really Good Reasons to Invest.”
Here are some healthy habits to incorporate into your daily living:
Save first, Spend later – set aside a certain percentage of each paycheck to go directly into your investment account, the more you save now, the greater your reward will be later.
Live within your means – spending less money than you earn is the key to building healthy finances. Incorporating this habit into your lifestyle will help increase your odds of reaching your future financial goals.
Don’t procrastinate – “Never put off until tomorrow, what you can do today.”
Keep a Healthy Credit Score – a good credit history can help you secure loans at lower interest rates which can allow for substantial savings on interest paid over time. The savings are increasing your amount of disposable income making more available to save for retirement.
Take Advantage of Employee Retirement plans – contribute whatever you can, especially if your employer matches your contributions. Keep in mind a 401k plan is savings on pre-taxed dollars, this is a much larger value than investing your taxed dollars.
Diversify your portfolio – as a young person you may be able to afford to be more of a risk taker since time is on your side. But be sure to diversify your portfolio and include some low-risk products, this can help maintain a level of protection for a portion of your account.
Review your Retirement Statements – Read your statements and pay attention. If you don’t understand your statements, make an appointment with your financial advisor and have them explain the report. Your financial advisor should offer annual reviews which will help you stay up to date with your investments and options.
Yes, young people do need to start saving and learning about investments as soon as possible! By doing so, you will begin to acquire the habits and skills needed to help you realize a bright and secure financial future. Be sure to consult with a trusted financial professional who can help educate and guide you to achieve your financial goals.
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