BY TALON YOUNG

Investing is the purchase of assets with the goal of getting a profitable return. Money is put aside in investment opportunities such as stocks, bonds, mutual funds, etc, where it will be working to increase the value of your principal deposit.

The earlier in life you start investing is the greater the chance of growth within your financial portfolio. “The early bird catches the worm” is a phrase that definitely applies here.

I’m sure financial stability is a common goal throughout the majority of the human race and if you get an early start on your investment portfolio, this goal can become more of a reality than just a fantasy.

The first factor to take into consideration is that if you start early, you have time. You have the time to feel out the market, see what stocks are gaining and which are losing. You can seek financial advice from many financial institutions that can help you gain a better understanding of how the market works and what to look out for when investing your own money.

You have the time to make your mistakes and recover from them. It’s always harder to teach adults as they believe they already know everything and their way is the best way. Take your time, listen and learn the ins and outs of the market and how best to invest your money for maximum gain.

A huge factor to consider is the interest you gain on your money in the long term and how to compound that interest. Compounding is the process of generating earnings on an asset’s reinvested earnings. So, as you earn returns on your investments, it would be best to reinvest those earnings to gain the potential for even greater returns.

If you start from an early age, your compounded returns could be your first step to financial stability. Here’s an example of compounding returns: If you invest $10,000 today at six per cent, you will have $10,600 in one year ($10,000 x 1.06). Now let’s say that rather than withdraw the $600 gained from interest, you keep it in there for another year. If you continue to earn the same rate of six per cent, your investment will grow to $11,236.00 ($10,600 x 1.06) by the end of the second year.

Another benefit of early investing is that it will give you a level of financial maturity. From an early age you will understand the value of money and understand how to use your money to earn more money. Early investors generally develop a positive spending pattern, not wasting money on material things but looking towards the future gain that is possible with investing.

Investing takes time and teaches patience, and over time you will see how beneficial it will be to your life. By growing your investments over time, you will be able to afford things that others can’t. Your personal finances are bound to get tight at times throughout your life, and investing at a young age can help in those tight times.

With the younger generation being so tech savvy, there is no better time to start investing. The world is open to you through the Internet. Any information you need is right at your fingertips. Investing isn’t all about money; people need to first invest in themselves. Take the time needed to do your research so that you’re confident in your knowledge of the financial market to minimise risk when using your own money.

As a young adult, investing might be one of the last things on your to-do list. Young adults want to go out and party and hang out with friends, use their money for activities happening in the present for instant satisfaction. They don’t see the long-term benefits of starting today. Instead of spending their money now, they could invest and have it grow, which could then be used to better their life in the future, for instance as downpayment on a house. It’s all about planning and seeing the future gain and taking those first steps in doing your own research and meeting a financial advisor.

Investing is essentially making your money work hard for you, but you must first understand what your investment goals are, then create an investment strategy and portfolio that suit your specific needs. There is no one investment strategy that is best for everyone, as everyone’s objectives and risk tolerance are different.

It is imperative to adequately research any security before investing your funds. For help in creating your investment portfolio, speak with a licensed financial advisor.