Many people are motivated to invest at an early age as a way to build their future wealth. By starting early, you can take advantage of compound interest and have a longer time horizon to grow your investments.

Australians aged 18-25 made up a quarter of those who began investing in the past two years, according to the 2020 ASX Australian Investor Study. Investors within the age group – what the study terms the “next generation” of investors – now make up 9% of all investors on the Australian Securities Exchange.¹

But what exactly are the specific benefits of investing at an early age? To find out more about this, keep on reading below.

Benefits of Investing at an Early Age

Take Advantage of Compounding

There are many reasons why you should start investing at an early age. The most important reason is that it will allow you to take advantage of compounding. Compounding is the process of earning returns on your investment and then reinvesting those returns to make even more returns. The sooner you start investing, the longer your money will have to compound, and the more money you can ultimately earn.

Achieve Financial Goals

Investing early can help you to reach your financial goals sooner. If you wait until later in life to start investing, you will have to save more money each month to reach your goals. However, if you start investing early, you can reach your goals with a smaller monthly investment.

Learn Good Financial Habits

Starting to invest early will help to instil good financial habits. If you start investing early, you will get into the habit of regularly setting money aside. This habit will serve you well throughout your life and will help you to reach your financial goals.

Tips on How to Invest at an Early Age

Investing can be overwhelming, especially if you are young. Below are some great investment tips to follow.

1. Invest in Yourself First

Before investing in any shares, funds, or other assets, make sure you have a solid financial foundation. This means having an emergency fund to cover unexpected expenses, paying off high-interest debt, and contributing to a superannuation account.

2. Consider Using Dollar-Cost Averaging

When you invest a lump sum of money all at once, you’re taking on the risk that the market could drop soon after you invest. However, if you invest that same lump sum over time (known as dollar-cost averaging), you should be able to smooth out the effects of market volatility.

3. Consider Your Investment Goals

What are you hoping to achieve by investing? Do you want to retire early? Renovate your house? Build up a nest egg for a rainy day? Once you know your goals, you can develop an investment strategy to help you reach them.

4. Consider Getting an Adviser

If you’re unsure where to start or want help developing a personalised investing strategy, consider using a financial adviser. Their services can help you invest in a diversified portfolio of assets, and they can do the heavy lifting of rebalancing and tax management for you.

5. Stay Disciplined

Once you’ve started investing, it’s important to stay disciplined. This means sticking to your investment plan even when the markets are volatile and avoiding the temptation to try to time the market.

Start Investing in Your Future with Coastal Advice Group

Investing at an early age is one of the smartest things that a person can do. The earlier someone begins investing, the more time their money has to grow. Even small amounts of money can grow into a large sum over time if it is invested wisely. If you are ready to start investing, Coastal Advice Group is here to help. Our team of experts can guide you through the process of investing and help you grow your money, regardless of your age.

We have offices located in Newcastle, the Central Coast, Sydney, Port Macquarie, and Byron Bay. Call us or book online to secure your complimentary first appointment with us today and get started!

REFERENCES:

1. https://www.morningstar.com.au/learn/article/australian-investors-are-younger-and-more-fem/205232

DISCLAIMER: The views expressed in this publication are solely those of the author; they are not reflective or indicative of RI Advice Group’s position and are not to be attributed to RI Advice Group. They cannot be reproduced in any form without the express written consent of the author. This information (including taxation) is general in nature and does not consider your individual circumstances or needs. Do not act until you seek professional advice. Newcastle Financial Planning Group, Central Coast Financial Planning Group, Sydney Wealth Advisers, Coastal Advice Port Macquarie and Coastal Advice Ballina Byron are subsidiaries of Coastal Advice Group Pty Ltd which is a Corporate Authorised Representative of RI Advice Group Pty Ltd, ABN 23 001 774 125 AFSL 238429.