You know what they say: “The early bird catches the worm!“
Still, let’s face it, there is a myriad of reasons why we put off investing so much. Perhaps you’re intimidated by market conditions, or maybe you’re looking to earn more money. Or, you could just be waiting to become a full-on expert in order to confidently maneuver the investment world. All worries and ambitions aside, did you know that the best time to start investing is actually right now?
Granted, we know that procrastination runs very deep in some of our veins, but we’re going to explain to you why investing early can actually benefit you in the long run. So, there’s really no need for you to be a wall street tycoon or an encyclopedia on investment strategy!
Here are 4 reasons to help you get started:
- You’ve Got TIME!
Remember, it’s about your time in the markets, not timing the markets, so putting off an investment can cost you more than you think! That’s because the sooner you put your money to work, the more you’ll benefit in the long term as you have a great deal of earning years ahead of you.
Plus, if you invest at an early age and incur a loss, you have more time to make up for the loss on investment. On the other hand, an investor who starts investing at a later stage in life, won’t have as much time to recover his losses, especially with more assets and responsibilities on the line. Thus with early investments, your investment gets more time to actually grow in value. Having time on your side also leads us to the next point…
- You Have Greater Flexibility
Since you have more time to recover from any losses, you can actually afford to take on more risk with your investments. This fact also gives you more flexibility to experiment and explore different investment avenues, improving your overall financial decision-making. After all, practice makes perfect (well, near-perfect, in the investment world at least!).
Not to mention, not taking any risk is a risk in itself, so experiment while you still have time and take the chance to improve your risk-taking ability. That’s why those who invest later in life are often more conservative and careful with how they invest their money. Though this isn’t necessarily a bad quality, you tend to limit the asset classes you can invest in the older you get.
- You Can Leverage The Power Of Compounding
Some people call it compound interest, others call it compounding, and we call it magic! Investing early allows you to take full advantage of your returns through compounding, which is the process of continuously re-investing an asset’s returns to generate additional earnings over time. That means the investment will generate earnings from both its initial amount and the accumulated earnings from the preceding time periods.
You could even picture compounding as a snowball. When you roll a snowball down a mountain, it picks up more snow with each roll and grows in size. The bigger it gets, the more snow it can pick up and the faster it grows – that’s compounding!
For a more concrete example, let’s say you invest $1,000 this year, and you earn a 10% annual return on that sum. That means you’d make $100 on your original $1,000 investment, and, as a result, you end up with $1,100. Even if you don’t contribute anything the next year and you earn the same 10% return on your investment (now worth $1,100), then instead of earning $100 in Year 2, you actually earn $110 because you’re getting 10% on that larger investment amount. Now, you have $1,210, simply because you let compounding work its magic!
As you can see, it pays off to invest early, consistently, and over a long period of time. In short, the longer your money can benefit from the power of compounding, the greater your returns will be as time goes on.
4. You’re Able To Support Your Goals (And Retire Early!)
Investing early in life allows you to get a head start in growing your wealth, which means reaching financial freedom sooner than if you were to start later on. Moreover, when you encounter difficult patches in your life, especially those that involve inevitable expenses, you might find that earnings from early investments come in very handy in such cases!
And, at some point in life, you’re going to retire, right? So, it’d be comforting to know you’ve created another way to support yourself through investments made over the years. Point is, investing can help you create that financial security we all crave, and there’s no better time to start than right now. After all, no one will argue if you start saving for retirement in your 20s rather than in your 40s!
As far as investing is concerned, ‘the early bird gets the worm’ certainly holds true. While we always urge you to initially carry out self-research, perform your due diligence, build a 3-6 month emergency fund and seek professional advice when needed, you shouldn’t shy away from investing when you’re able to! So, no more sitting on the sidelines waiting for the right time to grow your wealth, as investing early gives your money time for it to mature and grow, especially with strong discipline and consistency in place.
Are you looking to make an investment in Dubai, but unsure of where to start? Well, there are plenty of platforms out there that make investing accessible and hassle-free for the masses, like SmartCrowd, a Dubai-based real estate crowdfunding platform. If you’re interested to buy property in Dubai, then investing in Dubai real estate through Smartcrowd’s crowdfunding platform is one way you can start accumulating wealth at an early age. And, luckily, real estate crowdfunding also enables you to diversify your investments across various properties with small amounts of capital, minimizing your overall investment risk.
So, there’s no need to worry about potentially losing all your money if invested in a single property, as consistently investing small amounts in multiple properties is definitely less risky compared to investing in real estate the traditional way! That said, investment in Dubai real estate has never been this simple and hassle-free, so go ahead and download the SmartCrowd app for the ultimate real estate crowdfunding experience today!
Disclaimer: This blog is intended solely for educational purposes and shouldn’t be treated as financial advice. We suggest you always conduct thorough research, perform your own due diligence and consult with financial advisors to assess any real estate property against your own financial goals.