Investing in your future is one of the key things you should do if you want to live a carefree and comfortable life when you’re older. If possible, you should start your investment in your 20s to enjoy the following benefits:
1. High Risk, High Reward
One of the benefits of investing early is the extra time you have on your side. When you’re younger, you have more opportunities to take risks when it comes to investing.
You can choose to invest in more volatile options that provide high returns. Although you might be risking your money, you still have time to recover if something goes wrong.
This is the freedom that older investors don’t have. When you decide to postpone investing to when you’re older, you won’t have that much time to recover from a loss, so you’ll be limited to safer ventures that often have lower returns.
2. Compound Interest
When you invest your money early, you can benefit from compound interest, a type of interest that is earned on interest. With compound interest, you can let your money grow over the years even if you only invest once.
For a clearer picture, here’s an example. Let’s say you invested 1,000 pesos this year with an average growth of 10 percent. For the first year, you’ll make an extra 100 pesos, making your total 1,100 pesos. If you decide not to contribute anything the following year, you’ll still earn interest. However, instead of earning interest on your initial investment, the 10 percent growth will be applied to the 1,100 pesos in your account. So, by the end of the following year, you will have a total of 1,210 pesos.
This growth will continue year after year until you withdraw your investment. Therefore, if you start investing in your 20s, you can enjoy the benefits of compound interest longer.
3. Better Spending Habits
Learning how to start investing at an early age doesn’t only benefit your bank account. It also helps improve your spending habits and teaches you the value of money.
Instead of carelessly spending your money on material things that you want, you will learn to prioritize your expenses. You will also learn how to focus on your budget and save more money. Acquiring good spending habits early will pay off in the long run because they can be applied to other aspects of your life.
4. Preparation Rewards
Life is full of surprises, and it always pays to be prepared. One thing you can do to be ready for unexpected events is to start investing early.
By making investments in your 20s, you can be financially ready for anything that could happen. Whether it’s a medical emergency, an unforeseen career change, or a last-minute trip, you have the resources to address your needs without endangering your savings.
Start Investing in Your Future
Investing early can provide you with various benefits that will help you become successful in the future. If you are thinking about what to invest in your 20s, there are many options to choose from. You can choose to put your money in stocks, bonds, or mutual funds depending on your strategy.
However, it’s also important to invest in your health. To achieve this, you can get a variable life insurance policy, which allows you to enjoy having life insurance while investing your money in expertly managed funds. For more information, reach out to our team at Allianz PNB Life.