Growing up, young individuals are continually told about the benefits of investing. The sooner, the better right? However, while many think that it’s best to start in your early years, there are still some disadvantages involved. In this article, we’ll take a look at some of the pros and cons of investing young. Sound interesting? Then keep on reading!
Pro: You can take more risks
Being young allows you to take more chances when investing, as you have many years ahead of you to recuperate. Not only does this diversify your portfolio, but you have the opportunity to learn about different markets and their specific advantages. As you start to get older, you aren’t able to take as many risks and will tend to choose risk-free options, such as certificates of deposit or bonds. Take a look at these risky investments to get started.
Con: Loss from lack of experience
Definitely one of the major cons of investing during your youth, is that you don’t have accumulated experience. Investments can be complicated, especially if you are looking into mutual funds or stocks. Without the correct knowledge, you are putting yourself at a high risk of financial mistakes. One wrong move could lose you thousands of dollars.
Pro: You can increase your overall knowledge
Research shows that learning a second language is easier for younger individuals. The same principle occurs with investing. The sooner you start, the more chances you have to increase your overall knowledge. This way, by the time you are in your forties, you will know everything there is to know about investing and be able to make calculated and thoughtful moves.
Con: Vulnerable to scams and frauds
As young investors don’t have advanced experience and knowledge, they are more vulnerable to specific scams and frauds. For example, many fake websites, including cryptocurrency exchanges, can steal your money and information in a matter of minutes. This is why you must protect your funds, with a digital wallet. If you are thinking, “How can I have a bitcoin wallet?” click the link for more information.
Pro: You have more time to generate wealth
Obviously one of the main advantages and benefits of investing young, is that you have more time to accumulate your wealth. The sooner you start, the more chances you have of growing your investments and researching about the different markets. For example, as Investopedia mentioned, “A single $10,000 investment at age 20 would grow to over $70,000 by the time the investor was 60 years old (based on a 5% interest rate).”
When taking the above into consideration, it’s easy to see why investing young is recommended by many. However, there are still certain risks involved, which can’t be ignored. At the end of the day, it ultimately depends on your financial situation and knowledge about the subject. If you’re thinking of starting your investment journey, make sure to speak to a financial advisor first. They can recommend the best investments tailored to your needs and goals.