Why You Should Start Investing at an Early Age

posted on Tuesday, August 25, 2020 in Financial Tips

Investing in your early 20’s plays a vital role in achieving financial freedom in the future. Understandably, most young adults delay doing so, thinking they don’t have enough funds to put into an account when, in reality, they do.

In fact, starting an investment doesn’t require a huge sum of money. With proper planning and help from a financial expert, any amount you have now can greatly increase over time. If you’re still unsure whether to start doing it today, here are some benefits that will help you decide:

Be Able to Set Up an Emergency Fund Right Away

Investing at a young age enables you to set aside an emergency fund for future use. Whether you’ll encounter a failed business venture or an unprecedented job loss, you’ll have a safety net that will cover any unwanted expenses. Moreover, it also decreases the chances of incurring debt.

Get Higher Gains from the Compound Interest

Compound interest occurs when the interest incurred from an investment also gains interest over time. This allows you to grow your money at a faster rate. Saving up in your early 20’s will let you reap its benefits even more.

For example, if you invest $250 a month at the age of 25 and gain an average of 8% in annual returns, you’d earn $878,570 by the time you turn 65. However, this amount decreases as you delay investing.

Be Financially Independent When You Retire

Some experts suggest that an individual will need about 70% of their work income to live comfortably in retirement. Factoring in the benefits a retiree will get from Social Security, these would only cover about 40%, meaning it isn’t enough to be considered as the sole income. This reason alone requires you to have a secondary source of funds. By choosing to invest in your 20’s, you’ll save up a sufficient amount that will cover your living expenses upon your retirement.

Let Us Help You Prepare for Your Future

At Community 1st Credit Union, we help young individuals reach their financial goals through customized plans. Our investment services cover areas like business planning, estate conservation, and education funding. To learn more about our programs, schedule a no-cost, no-obligation appointment with our financial expert today.