Even if you are 30 years or more away from retirement, it is never too early to start investing. In fact, I think you should start investing when you’re young – the younger the better actually. Keep the following stat in mind; according to the Center for Retirement Research, those who wait until 45 to save for retirement (assuming retirement at age 65) have to save three times as much as those who started at age 25.
With that in mind, if you are able to start investing when you’re young then you should by all means do it. It is also helpful to know that you will very likely have needs later in life that aren’t related to retirement planning?where you will need a sizable amount of money and thus another reason why you should start investing in the stock market when you’re able to.
It goes without saying that there are risks when it comes to investing, but in order to grow your money?some?risk is going to need to be taken. With all of this in mind, here are some tips to help you get started investing when you’re young.
Start Off Small
While you might have big dreams of accumulating significant wealth from your investments, you have to start somewhere ? and that usually means starting out small. There is a good chance you will make a couple mistakes along the way, so don?t expose too much of your money until you are confident that you know what you are doing.
If you’re investing on a limited budget?you might feel like you don’t have the money to invest. This, however, is a myth in my opinion. There are many brokerages out there, such as Motif Investing, where you can open accounts for as little as $250. If you can put away $25 or $50 per month you can reach that amount in under a year. If you’re looking for other options, make sure to check out my best online brokerages?page to see what else is out there to choose from.
Get Some Help
Unless you have an education in investment-related topics, it could be a good idea to get help from someone to help get you started. That can range from getting assistance from a friend or family member who is an experienced investor to using resources made available by your 401(k) plan provider.
The one caution I’d give is to not run out and hire a financial advisor when you’re first starting out investing. There are some good ones that do help those just starting out,?but you also need to be careful as there are also many out there who are compensated by directing you towards one investment or the other. The point being to do your homework before potentially hiring someone.
Read Plenty When You Start Investing
While professional help can be helpful that doesn’t free you of responsibility. One great way to educate yourself as you start investing is to read as much as you can about investing. There are quite a few investing books for beginners?out there, though I tend to direct most to [easyazon_link asin=”0393340740″ locale=”US” new_window=”default” nofollow=”default” tag=”wisedollar-20″ add_to_cart=”yes” cloaking=”default” localization=”default” popups=”yes”]A Random Walk Down Wall Street[/easyazon_link] as it’s the best book out there (in my opinion) that helps boil down some very complex topics and make them simple to understand.
I know that reading about investing might seem overwhelming or boring, but don’t let that hold you back. You want to be able to educate yourself as to the basics so you can get started investing more effectively.
Have a Long Term Plan
Investing should almost always be done with a long term goal or vision in mind, so try to map that out for yourself as soon as possible. That vision doesn?t necessarily have to be a grand one, either ? it could be as simple as trying to accumulate enough money to send your kids to college when the time comes, or to help you purchase a vacation home as you get closer to retirement.
Whatever kind of goals you have for you and your family later in life, starting investing when you are young is a great way to bring them within reach. Start small, ask for help, and educate yourself as much as possible to make your investing experience a good one.
How did you start investing when you were young? Do you have any regrets when it comes to investing??What motivated you to start investing in the stock market?
Photo courtesy of: Michael Daddino
Wise Dollar
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Don’t be fooled into thinking that $20 here and there won’t add up in the long run. When I started working after college, I was saving $20 per paycheck in my 401k plan. At the time it felt like nothing but after a year or two, I was surprised by how much it grew. I started to increase the amount I was saving and the balance just kept growing and growing. No amount is too little. We all have to start somewhere.
Of course, you do need to have a long term focus as well if you want to be successful at investing. You can’t be jumping in and out of the market every time it falls. Learning how the market works will help ease your fears and help keep you invested during both ups and downs.
I could not agree more Jon! It might seem like peanuts after a year or two, but the point is that it helps you develop a discipline – not to mention the fact that it grows substantially over time.
I wish I’d started at 15 when I got my first job. I could have put away half and still had plenty for whatever I thought was important back then. If I’d kept that up through college and beyond, I’d be much further ahead now. You really don’t have to save that much per month if you start young. It’s much easier to always be in the habit than to try and play catch up.
I feel the same exact way Kim. All we can do now is do the best we can to make up for it as much as we can.
I started investing when I was 18, I’m now 19 and in that short time, I’ve done quite well. There’s also been some great things for first time investors. As you mentioned, Motif is great. Another service that is cool is called Acorns. It rounds up every transaction you make and invests the change, commission free. There’s also Robinhood which allows you to trade commission free as well. Many great options, good to start young!
That’s awesome you’ve been able to start so young S.C.! There are definitely more options around today, which is great. I’ve heard of Acorns, but have not taken a real in-depth look at them though plan to.
I’m so glad I started investing for retirement at age 19. Of course, I wasn’t able to save much since I was a student and only working part-time, but it does add up over time!
Good for you Kayla and that it does!
I started investing when I was 26, 5 years after college. I just wish it was earlier and read more because I lost some amount of money back then. 🙁 For those young, it’s really good to start early, read more, and get help from someone. Be cautious always.
I get that Jayson, though many don’t even start that early though fully understanding as I wish I would’ve started earlier as well.
This is so true you said: “It is never too early to start investing”. I also encourage everybody I have a chance to talk to about investing to start as early as they can. Many times I hear excuses such as “I have no money, I have other priorities, I am buying a house, we are going to have a baby… etc.” Investing should always be your priority number one. Even if you invest only $50 a month, it is worth doing it. It will pay big later. I teach my daughters (10 and 12) to invest their allowances. Their accounts are small, like only about a 1000 bucks account each. I taught them how to invest small amount of money to avoid commissions, collect dividends and grow their cash. And they can see the results already! If they endure in doing what they are doing now, they will retire in their late 30s or early 40s just because they started now when they are kids.
Do you remember that story about an old lady whose father bought her one share of AT&T in 1930s (the company was named Bell Labs those days)? When she died she owned many stocks from spinoffs and her stack was a few million of dollars. All just from that one stock!
Great points!
I’m nearly 23 years old and have just started reading about PF and investments. It’s definitely looking like something I should start doing sooner rather than later.
I have always thought of investing early, but somehow haven?t been able to do it in a proper way. Thanks to your article here, I am going to definitely start saving and investing for my retirement. Thanks again!