The stock market is generally a daunting investment asset and certainly the one where you get better with experience. The earlier you start learning about it, the better you become with age. Hence, you should start acquiring knowledge about the stock market in the twenties so that you can extract the maximum benefits out of it. This is the right age to begin spending and saving; it will ensure better financial stability and success in the near future. In modern times, if you don’t have time in your hand, you will always be lagging behind no matter how much success you have.
When a person in his forties is earning as much as a young twenty-year-old from share market investment, the younger person will be considered more successful as he has the time and age in his favor. Most young adults feel that they can keep aside the investment aspect and enjoy life until they shoulder responsibilities. They have the conception of starting to invest once they have a steady flow of income.
In other words, young adults want to spend a few more irresponsible years before they take up their financial situation into their own hands. The twenties are a prime age to start investing, and investments can be made in small amounts too. Investments can be made even after student loan payments and even on low salaries. It is a smart move for the younger people in their early twenties to open a Demat account or start a SIP. Here are a few reasons why you should definitely invest in your early twenties:
- Time to Experiment and Take Risks
There is ample time for you to take risks. The twenties is a prime age to start with the investments. In case you incur losses, you can recover it by diversifying your investments through investments itself or make a shift in your financial earning format. This is the age when you can experiment with your finances for good and get to know the various ins and outs of the investing world. If you have opened a Demat account, I recommend you to try out intraday trading. You can buy and sell your stocks in a single day and earn handsome profits.
- Fewer Responsibilities
In your early twenties, you have fewer responsibilities for yourself or your family. If you stay with your family, you can even increase your savings and investments. In such situations, a little financial risk will not hurt you much. Even if things do not work out properly, you have the time to get back on track. Age acts as a significant motivating factor in the investment realm.
- Leveraging the Power of Compounding
When you start investing early, you can save and invest a humongous amount of money. Throughout the years of adulthood, these investments will get compounded every year. The compound interest accrued at maturing will be sufficient enough to fulfill your financial goals.
- Improve Spending Habits
In the early twenties when people begin their professional life and start earning money, they usually have the tendency to splurge money on unnecessary things. Because of this, they develop a brash lifestyle and no matter how much they earn, they always face a cash crunch due to improper spending. It is advisable to invest 70% of your earning and plan your expenses from the rest 30% amount.
The financial lessons you learn by investing early is profound and valuable. The more experience you acquire, the wiser and profitable you become. There may come a phase in your life when you can even consider early retirement. You may not have to depend on your business or job for your monthly expenses. Compound interest is definitely the eighth wonder in this world, you only get rich by your return on investments.