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Every money-smart individual knows that it’s best to start building a wealth portfolio sooner rather than later. However, for the vast majority of us, this knowledge and the desire to grow our finances doesn’t come until later on, when we look to buy a house, have children, or save for retirement.
While it’s never too late to start investing, starting early poses numerous benefits and ensures that you’re truly making the most of your money.
Let’s take a look at three reasons you should start investing early.
Compound interest
If you open an investment account, you’ll benefit from earning interest. Over time, this can add up to a significant amount, and you’ll find that your interest compounds – this is essentially the process of earning interest on your interest.
Investments that will earn you compound interest include savings accounts, savings bonds, certificates of deposit and dividends stocks. The longer you invest, the more money you’ll earn – so the earlier you get started, the sooner you can benefit from your profits. The type of investment that you choose will depend on your individual circumstances, such as your budget and goals for investing. It’s important to take this into consideration and create some sort of investment plan, to ensure that you get what you need out of your investment.
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nflation protection
Some investments are well known for hedging against inflation, such as gold, which has protected countries for centuries. You can also benefit from these investments as an individual, by purchasing an asset that retains its value as the cost of living increases.
Ultimately, any investment you make early will put you in good stead to combat economic crises. The more secure your finances, the less you have to worry about a financial decline impacting your wealth security.
Smart money habits
Being smart with money is about more than just knowing where to invest. You need to be able to budget and limit unnecessary spending, and know how to responsibly borrow money from lenders.
When you invest, you’ll come to learn exactly how to protect and grow your finances for long-term stability. You may experience knocks – after all, no investment is risk-free – an
d will come to better understand the importance of making sensible money choices as a result. Wealth is built over time, and keeping a close eye on your money is a good way to become more aware of your spending habits as a whole, both healthy and unhealthy.
A gift for your future self
Of course, you can benefit from compound interest, inflation protection and financial literacy at any stage of life. But, no matter what time you begin to reap these rewards, you’ll likely ask yourself why you didn’t start sooner. Investing early is one of the best gifts that you can give your future self – in fact, it can change the course of your life for the better, and ensure that you’re financially secure for life no matter the economic climate.
