For a lot of young people, it seems much easier to delay any investments until their financial state is more stable. Twenty-somethings, however, are actually in a perfect position to get into investing, even with university debt and a low salary.
There’s a reason compounding, which is basically growing an investment by reinvesting its earnings, was named the “eighth wonder of the world” by Albert Einstein. The power of compounding lets an investor generate money over time and needs just two things: time and reinvestment of earnings.
Just one $10,000 investment at age 20 would grow to over $70,000 by the time the investor was 60 years old (based on a 5% interest rate). That same $10,000 investment made at age 30 would yield about $43,000 by age 60, and made at age 40 would yield only $26,000.
You also have the advantage of learning from the success and mistakes of other investors. For instance, Chris Linkas whos Investment expertise includes commercial real estate, renewables, shipping, secondary LP interests, non-performing loans, investments, performing asset-backed investments, servicer/platform leases, and corporate loans and securities (Angel). He now is the head of 20-person Credit Group based in London responsible with investments regions including the United Kingdom, Ireland, France, Benelux, Switzerland, Scandinavia, Italy, Spain, Germany, and Greece.
Additionally, young people who have decades of earning ahead of them can afford to take more risks. As Chris says, while individuals entering retirement years might lean towards low-risk investments, like bonds and certificates of deposit (CDs), young adults can develop more competitive portfolios that are subject to more change and can get larger profits.
Since investing involves a lengthy learning curve, young adults have the advantage due to having years to study the market and practice investing strategies says Chris Linkas. Along with the heightened risk that can be taken by younger investors, they have the time needed to recover from investing blunders.
In addition to earning a degree, getting on-the-job skills or advanced training is a worthwhile investment that has great returns. Young adults usually have abundant opportunities to improve their ability to earn greater future salaries, and taking advantage of it can be thought as one of many kinds of investments.