It may not sound like the most exciting prospect for most people in their 20’s, but there are a wealth of reasons why investing when you are still young is actually an excellent idea.
The main thing to remember is that it might not be as alien a concept as you imagine, in fact, entering the investment market has become easier in recent years for all levels of knowledge, and for bankrolls of all sizes, and the chances are, you are already investing and haven’t even realised it.
If you are currently enrolled in a company pension scheme, the chances are your pension pot is safely invested, and growing towards your future. The only difference is that you are not taking an active part in that process.
However, time is a massive factor when it comes to investing, and the more time you spend invested, the more the miracle of compounding can work in your favour. Whilst 18-34 year olds currently face greater economic challenges than the generations before, what they do have is time. Investing sooner, rather than later, can place you in a position whereby you can start earning interest, on interest. A proven way to grow your capital.
This is all very well, but a lack of knowledge and understanding in the market is still holding a lot of potential investors back. Fear of losing what little savings you have stays many a youthful hand when it comes to taking the plunge into the stock market. We’ve all read that the value of your investments can go down as well as up, and you could end up getting back less than your original investment. A savings account can certainly feel safer, especially when the markets are so volatile.
However, record low interest rates are struggling to keep up with inflation, meaning a savings account is now a place where your money can actually lose value over time. Modern platforms like Interactive Investor are also providing a welcoming environment for investors of all abilities, with ready made, fully managed portfolios providing cost effective solutions for those with little knowledge or experience. Historical returns in such portfolios have certainly outstripped savings accounts and with time on your hands to ride out any market volatility, this is almost certainly the way to make your financial dreams a reality.