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 A Random Walk Down Wall Street 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