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Why You Should Start Investing Now


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We learn so much in school, but we never learn anything about personal finance. Which is odd, considering that everybody is preoccupied with money once they enter the real world. It’s more important than ever to become financially literate. Because…

1. Compound interest is awesome

Mind Blowing fact: If you invest $1000 for 7 years with a return of 10% per year and then stopped contributing to your portfolio, you will have more money at any point in time than the guy who started 7 years later at $1000 per year at 10% for the rest of his life.

The lesson? Invest early and often. I know it’s hard to get started early, but if you can manage it, you will be set for the rest of your life.

2. Social Security is in real trouble

Depending on who you ask, 30 years from now (when the first Millennials start retiring), Social Security will either be paying 75% of its current benefits schedule or be completely bankrupt. It all depends on how fast you think the population will age. Given the fact that many people are delaying marriage and medical technology keeps prolonging our lifetime, it’s safe to say that there will be significant changes to Social Security by the time our generation retires.

That all but guarantees that benefits will be significantly lower than their current levels. More and more adults don’t think they will be able to retire, and with benefits reductions on the way, it seems that number will only grow. With that knowledge in mind, you shouldn’t rely on the government to provide for your old age. You are your best advocate.

3. Experience you gain now will help in the future

I first started investing in 2007. Times were good and my portfolio did extremely well. I thought I was hot shit. Then 2008 came along and I lost half of what I initially invested. I was in shock. How could things have reversed so drastically?

I came out of the financial crisis with a much greater understanding of how financial markets operate, and I tailored my portfolio accordingly. I diversified my investments and also reduced my exposure to volatile emerging markets. Now, in 2014, my portfolio is in great shape and 2008 is simply just a bad memory. When the next financial crisis arrives, I’ll be ready.

Knowledge you gain learning about finance today will also pay dividends in the future. You don’t want to wait until your 30s to get serious about money. The average person will work about 40 years in their lifetime before they retire. Don’t wait until your career is a third of the way gone before you start considering retirement. Reread point 1 to understand why it’s so important to start now.

4. Life will be much less stressful

A lot of parents worry about providing for their kids. Food, clothes, shelter, an education, all of that costs money. And there is nothing more liberating than just being able to cut that check without worrying whether you can afford it or not.

The issue of paying for college never came up between me and my parents. It was simply expected that my parents would pay for it. And they were able to come up with the money instantly without taking on any debt, because they had always been diligent savers. Looking back, I can’t begin to fathom what my life would have been like if I had to pay my own way. The pressure from being crushed under the weight of my student loans would have been incredible.

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Every day, it seems like I’m reading or hearing about somebody straining under their student loans (which aren’t dischargeable in bankruptcy). I’m extremely grateful for my parents for allowing me to opt out of that situation. And I want my future kids to never have to worry about their wellbeing and education as they’re growing up. That requires money, a lot of it, and that means I have to start saving now.

Title Photo Credit: flickr

in your inbox everyday at 10am CST.

No fluff or "pie in the sky inspiration." Just real stories.

Written by Jay Sun

Jay Sun is a software developer living in Atlanta. He writes about far less interesting things at his blog