For the typical American in their 20s investing their money for the future seems like an issue far off in the distance like picking out a retirement home, just another thing to take care of when they are older. The reality is quite contrary. Today I’m going to give you 5 tips about investing in your 20s and why it is so important.

Time Is Money

If you are still in your 20s time is your best friend. This means you have thirty, forty, maybe even fifty years to let your investments grow and compound and become a fortune. This is a luxury that people who start investing too late in life simply don’t have. Don’t believe me? Here is a simple example of the potential,

Let say you start investing at age 30, a little late in the game but not terrible. You start investing 100 dollars a month for the next 30 years and make an average 10% gain every year. At face value, your 100 dollar monthly investment will grow to roughly 208,000 dollars. Ok not bad but what if we had started at age 20? Now your money has 40 years to grow and the end result is roughly 559,000 dollars. Now we are getting somewhere. Finally, let’s assume you make a slightly better return on investment of let’s say 12% which is still nothing out of the ordinary, and you decide to invest 150 dollars every month. The end result is roughly 1,469,000 dollars. That’s a respectable amount of money to retire with for most individuals and absolutely achievable for everyone. Now obviously we didn’t account for taxes or inflation but this example represented very modest numbers to begin with and assumes you never invested more than 150 dollars a month.

The 20s Is Your Time To Grind

You know the saying grind in your 20s, build in your 30s, chill in your 40s? Well, its more than just a saying, its how you should model your life. Being filthy rich and relaxing is not what your 20s should be all about so don’t expect that to happen. Now is your time to get down and dirty and work hard and make that money so you have a solid foundation to build from when you enter your 30s. You will probably never have fewer responsibilities than you do right now so take advantage of all that extra time you have.

Security For The Future

The sooner you start investing, the safer your financial future will be. If you start investing in your 20s you will be able to create a great financial safety net for yourself as you enter your 30s and 40s. We can’t predict all of our future financial hardships and we definitely don’t want our retirement to be delayed. So do your future self a favor and make sure you won’t be needing resources you wish you had.

You Can Harness Aggressive Investment Strategies

At a younger age, you have a longer time horizon which basically means the time from when you make an investment until the time you need to cash in that investment is longer. This means that in your 20s you can create a more aggressive portfolio than someone who is older or has a shorter time horizon can because they are more focused on protecting their current assets with low risk, low return investments. Being able to build an aggressive portfolio in your 20s means you stand to make much higher rates of return. Even though you are exposed to more risk you still will come out on top because you have decades to make up for a rough year or temporary downturns in the market.

Don’t Forget To Invest In Yourself

Stepping up your personal finance and investing skills is an awesome thing but don’t forget the value of education. Being a lifelong learner goes beyond your 20s. As you continue to expand your horizons and put yourself out there it will seem as if new doors are always being opened for you. The bottom line is simple; how you spend your 20s will likely define you for the rest of your life so get out there and embrace the grind.

If you are ready to start investing make sure you check out these posts 6 Mistakes Beginners Make Investing and How To Invest Your First 1000 Dollars to get you pointed in the right direction. Let me know what you think by leaving a comment or click on the “contact” tab at the top of the page to email me any questions and as always thanks for reading and have a great day!