Why should we invest in early 20s?

 Why should we invest in early 20s?

Investing in your early 20s is a highly recommended financial strategy for several key reasons. Firstly, the earlier you start investing, the more time your money has to grow through the power of compound interest. Even small, regular investments made in your 20s can accumulate significantly more wealth over time compared to waiting until later in life to start investing. Secondly, as a young investor, you generally have a longer investment horizon and can afford to take on more risk in your portfolio. Riskier investments like stocks have historically outperformed safer options like bonds over the long term, and starting early allows you to weather any short-term market volatility and ride out the ups and downs of the market.
Thirdly, getting into the habit of investing early on can help instill a lifelong discipline of saving and growing your wealth. The earlier you start, the more natural it becomes to prioritize investing as part of your overall financial planning. Additionally, the money you invest in your 20s has more time to compound, potentially leading to a larger retirement nest egg down the line. Furthermore, investing in tax-advantaged accounts like 401(k)s and Roth IRAs in your 20s allows your money to grow tax-deferred or tax-free, further boosting your long-term returns. The key is to start small and be consistent, as even investing a few hundred dollars per month in your 20s can make a significant difference in your long-term wealth compared to waiting until your 30s or 40s to begin. The earlier you can start, the better positioned you'll be to achieve your financial goals.