Under 25? The best time to start investing is now
Time equals money when it comes to investing, and time is the one big advantage you have right now.
Saving money when you're young can be tough, especially with ongoing cost of living pressures. So it's understandable if you don't have thousands of dollars to drop on Apple stock each week.
But did you know that it's actually time, not money, that's the key to growing your wealth?
In the immortal words of Kenneth Fisher, "time in the market beats timing the market", i.e. the longer you're invested, the better your returns are likely to be.
So if you're young and still waiting to take the plunge on investing, you could be throwing away the one big advantage you have.
According to our survey data, gen z has an average of $3,940 invested in the stock market, which is nothing to sniff at.
Yet only 29% of them plan on buying stocks in 2024, and only 24% of 18-24 year olds would put some money into the stock market if they were given $50,000 today, according to our data.
And that decision would have huge implications.
Let's run the numbers
To illustrate the importance of time, here's a little example:
The NASDAQ-100 is a stock index that includes the 100 largest non-financial stocks on the NASDAQ stock exchange.
Over the last 20 years, the NASDAQ-100 has averaged an annual return of 14.33% (including dividends).
That means someone that invested $1,000 into the NASDAQ-100 in 2004 would have around $14,500 today.
If they had simply invested an extra $50 every month during that 20-year period, they'd now have over $85,000.
That's serious money.
But if they had waited another 5 years to start investing, they'd have less than $40,000 (assuming the average return was still 14.33%).
That's a $45,000 difference.
Convinced yet?
How to get started
Thankfully, starting investing is a lot easier than you may think.
You can buy index funds like the NASDAQ-100 directly through most share-trading platforms or online stock brokers in the form of exchange-traded funds (ETFs).
The benefit of an ETF or index fund is that they have low fees and are considered one of the safest (and most beginner-friendly) ways to invest, whilst still offering the potential for good returns.
In fact, legendary investor Warren Buffet bet that hedge fund managers wouldn't be able to outperform a passive index fund over 10 years, and he was right.
The time is now. Get moving.
Looking for a low-cost online broker to invest in the stock market? Compare share trading platforms to start investing in stocks and ETFs.
