Despite the fluctuating economy, many people still opt to risk a fraction of their money to make investments. An investment, in terms of finance, is a purchase for an asset that is expected to grow profit throughout time. This means that investment’s gain is allotted for future use. As a matter of fact, there are a lot of companies one can invest. Most companies observe transparency by publicizing their financial growth such as Lloyds share price live.
But in spite of the financial gain it entails, only a few millennials have invested money in the market. According to 2016 Bankrate survey, only 1/3 of millennials invested in the market. The top reason for this finding is because of the lack of capital. Another reason according to the survey is not having knowledge about stocks.
When investing, it is evident that time and the financial gain are directly proportional. This suggests that you should start early in order to maximize the profit. Starting early on investments can give you, the investor, many advantages in handling the market in the long run. It is important to be aware of the benefits of an early investment.
Time and Risk correlation
Most young adults constantly have a high appetite for risk. The abundance of their time gives them an edge in terms of investing. Being flexible in investment will allow them to take more risks and more time to recover if things took a turn for the worse. Aside from that, a young age usually requires lesser responsibilities thus opening more possibilities in stretching your financial growth. Those who start late in investing are usually more cautious because of their involvement in more responsibilities such as family, medical expenses, mortgages, and the like.
The Magic of Compounding
Starting early on investments means more time to benefit from compounding. To further elaborate, study this chart to better understand how compound interest works. Compound interest refers to the interest gained from the initial investment and on the interest from previous deposit or loans. It is also called the “interest on interest”. The longer the money is invested to grow, the more gain it will generate in the future.
Investing is a good means of improving and testing an individual’s financial literacy. This will help in developing a good financial management skill. Investing will also enforce discipline as this can help in controlling oneself when the investment is already generating a big amount of money.
Solidifying financial security
It can’t be denied that money is one of the factors that can influence a person’s peace of mind. The possibility for a good retirement is increased by investing early. An early investment helps in consolidating the financial stability and lessens the burden whenever a financial crisis comes up.
Early investment can definitely generate more profit and more financial opportunities. But remember that you should also equip yourself with the right knowledge when venturing into this industry. Taking risks must also be accompanied with being wise in order to know the right risk to take.