The Real Cost of Not Investing Young

Reasons to invest early on in your life

Investing is essential when dealing with money. Students should learn about money and investments starting from middle school. Once you start making money, you need to know how to manage it; otherwise, you may end up spending your entire income while having no savings or security. Not only will investing make your life easier, but it will also give you numerous opportunities to better your life and have a piece of mind.

Benefits of Investing Early

The earlier you start investing, the more capital you will build. Ideally, you should educate yourself on investment instruments right after receiving the very first paycheque. You cannot expect a 14-year-old working at an ice cream shop once a week to read up on mutual funds and ETFs. However, when you start earning regular income and make financial decisions — this is the prime time to learn about finances.

There is a massive difference between starting your investment portfolio at 20 and 30. The later you start, the fewer chances you get to earn passive income and grow your investments.

Imagine you’re planning to put away $500 monthly until turning 65. Look at the difference between starting an investment account at 20 compared to starting at 30, if we assume a 7% rate of return:

Prepared by the author using the compound interest calculator

As you can see, commencing the investment journey at 20 will accumulate to $1,587,117 by retirement age, while starting at 30 will only earn you $679,567. The cost of not investing young is $907,550.

The earlier you start, the more money you’ll have, all thanks to compound interest.

The earlier you start investing, the more capital you will build.

Types of investments — you have a choice

There are many ways to invest; you don’t have to pick only one method. A single investment stream may not be sufficient — you should choose several of them. Your investment options are:

  • Funds: mutual, segregated, exchange-traded, and many more.
  • Stocks and bonds.
  • Real estate.
  • Retirement funds.
  • Precious metals and other commodities.
  • Options and annuities.

And many other ways, including cryptocurrency and GICs. Investing also allows you to get creative — for example, you can purchase a parking spot in a downtown condominium and rent it out. Once it’s paid off, every dollar you receive after that is your eternal passive income. There are many ways to grow your net worth, and it often requires imagination.

Non-monetary Benefits of Early Investments

Dollar bills shouldn’t be the only motivation to invest. There are many more “invisible” benefits that carry a lot of value to your life. I would go as far as saying they can be more important than money. Your life can be much more peaceful and comfortable, not to mention it will bring you fulfillment.

The Feeling of Security and Peace of Mind

One of the main motivations to have money set aside is knowing you have a back-up plan if things go south. No one can predict the future — you might lose your job next week or get sick. Having savings and investments means not worrying about what tomorrow might bring. You can’t control the world around you, but you can do your absolute best to prepare for hardships. Eliminating financial stress can change your life drastically.

The Feeling of Accomplishment

Nothing feels better than realizing you reached your destination, and you did it on your own: minimal help, minimal support, and no trust fund. Getting an education and advancing a career is great, but learning how to invest and having significant results is much better. You can’t compare the feeling of being confident and successful to anything else.

Assurance that Your Family is Taken Care Of

Having money saved up means you don’t have to worry about your family if something unfavorable happens. It’s good not to stress out about putting food on the table, paying for housing, medical care, and other essential expenses. If you have capital covering potential emergencies, you don’t have to worry about your loved ones struggling to make ends meet.

Endless Freedom

High net worth signifies freedom. It means you don’t have to work at a job you hate, for a boss you despise. You have a choice of making changes and taking calculated risks because you have a cushion to fall back on. There is no need to keep doing what you dislike because your mortgage payment is due, or your car needs maintenance. One of the best benefits of building wealth is endless freedom.

Invest in Yourself First

Before you start investing, you need to invest in the most important person: you. Don’t jump the gun and give yourself time to learn about finance. There are countless sources out there: books, podcasts, documentaries, TV shows, Youtube, and blogs. You can start by exploring the top-rated financial books or by searching “how to invest” on Youtube.

Prepare to invest in your education, as well. Learning the real-life skills is essential, while conventional education can be quite dry and offer little practical value. Despite that, you can rip the benefits of a college degree if you choose a profession with high-income potential. To invest money, you need to earn money first. Degrees like Accounting or Software Engineering can allow you to make $100,000 after taxes. If you save 50–70% of that money, you will accomplish your financial goals quite fast.

Learn From Others

Don’t ever assume you’re the smartest person in the room. On the contrary, approach each topic with an open mind and forget everything you know. This way, you may learn something you have never considered before. Ignorance will prevent you from devouring knowledge that can make you smarter while staying humble and willing to listen will allow you to obtain new skills.

Some of the best advice can come from places you never expected. The professor who talks too much about his life during lectures might teach you more in 10 minutes than someone else in the entire year. Genius ideas don’t come to those who think they know everything, so stay quiet and listen intently.

Don’t ever assume you’re the smartest person in the room. On the contrary, approach each topic with an open mind and forget everything you know.

My Personal Experience

I started learning and investing young. I opened my first retirement fund at 19, which is also when I first traded stocks. My interest in finance allowed me to become financially independent when I turned 18, as well as to pay for my education fully. Due to certain financial hardships, I had to use money from the retirement fund on emergencies, so I re-started it at 25. Right now, my goal is to pay off my debts as soon as humanly possible and to continue my investment journey. The ultimate goal is to invest in real estate, secure passive income, and retire long before 65.

The best life advice I’ve heard came from people I never expected to learn from: people telling me about their lives, strangers at events, barely known Youtubers, and Internet stories. You never know when you hear a smart idea that will help you improve your life. So, the best advice I can give you is to listen to people.

Money is about more than just the dollar signs. It’s security, insurance for emergencies, caring about loved ones, and self-improvement. Start investing as early as you can. And if you cannot — it’s never too late to start, even if you’re older.

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Canadian. Mental health activist. Banker and financier who drinks too much coffee. Pursuing happiness and sharing my thoughts with others.

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