This is a short post, but I am aiming to put forward the idea that you should start investing in stocks as early as possible.
Well, think about the bank account your parents/grandparents created for you, where they put some money to get you started in your financial life. It’s like that, but you are doing it yourself for the future you. Ray Dalio and Warren Buffett have both said they started well before they were even 20. My advice is start as soon as you can open a trading account. Be mindful that stocks are risky but the potential rewards make it fundamental.
I could give you a lot of reasons but here are the top 3.
- Starting early gives you time to learn, and make mistakes that won’t hurt your long-term net worth. It allows you to tolerate a higher risk/reward ratio, which gives you access to a larger potential upside and time to recover if you make a bad choice.
- Being able to participate in a sector or company with a fraction of what would be required to take on such business. If you pick a sector you like it could end up being a gateway to start your own company in that industry.
- Stream of income: a part of the stocks you pick should be blue chip (large, established) companies, because they will pay dividends every year, directly to your account and you can either keep those dividends earning compoinding interest or acquire more shares. The value of the stocks will change as well.
This is undoubtedly a more complex issue, but I hope this sparks some thought. If you have yet to start, an easy way is to get your account and buy an index fund such as the ASX 200, and start researching as you go to identify individual stocks.
Happy investing! and if you haven’t already, follow me on Twitter for more thoughts and conversations regarding investment.