A simple demonstration of why you should start investing while you’re young

Okay, this might be a bit dry, but bear with us. Investing your money is the safest thing you can be doing with any disposable income. You might be thinking: “I’ve just graduated, I have a ludicrous amount of debt and pretty much no disposable income. Investing can wait”. While there is logic in your reasoning, there’s always time to invest.

We wrote about when you should be starting to save for retirement and found out that 27% of millennials don’t expect to retire until they are around 70 years old. 48% of the same survey group believed that they should be saving for these brief retirement years between the ages of 20-29 compared to 24% who said 30-39 and 13% who said 40-49.

Obviously there is reason among the young people to commit a bit to the future. But investing seems to have a higher entry point. There’s this misconception that you need  a lot of money to begin with in order to start investing. It turns out that investing a little every year while you’re young turns out a much higher pay-off than investing the same amount for 40 years.

Okay, so assuming a generous 10% rate of return a year (this is hypothetical), someone who invests £2,000 yearly between the age of 19 to 26 and never invests again stands to earn a lot more than another person who invests the same amount between the ages of 26 and 65.

See the infographic from Life Hack below for more information!

investing

Image credit: Life Hack

It might look like a daunting set of numbers, and that’s understandable. This chart represents potential earnings but that’s not even the largest benefit. This type of saving builds a strong financial foundation for the way you use your money. It ingrains the idea that “I will invest and save even if I have to give up certain wants for the time being”.

Pizza and beer sounds good now, but so does being minted when you’re older.