The true answer to the question, at what age should you start investing, is NOW! It doesn’t matter how old you are if you have to ask the question it means that you haven’t started yet! And the younger you are the better.
Obviously if you are not earning, investing is difficult. So it comes down to the fact that you need to have an income to be able to put something aside. The golden rule is to put 10% of what you earn into investment. Build this up and never touch it… that is until you are no longer working and need to replace your income with your money you have invested over the years. This is called ‘paying yourself first’. Don’t be daunted by the figure of 10% of your income because putting even a small amount aside will only benefit you at the end of the day.You have to invest for your retirement, as opposed to saving for it!
While you may say you can’t afford to invest anything for your future, I say they can’t afford not to.
Think about it. If you are 18 years old you have 47 years to invest. If you were to invest $100 a month (or $1200 a year) during that period at a rate of 7% pa you have the potential of having about $441,200 invested. Saving that same sum at the same rate of return for only 27 years gives you about $96,260…I’m sure you’ll agree that the earlier you start the better. (Please note this calculation does not take into account taxation and inflation and is a rough guide)
Retirement may be a long way off for you — or it might be right around the corner. No matter how near or far it is, you’ve absolutely got to start saving for it now. The increase in cost of living and the instability of social security has certainly made investing more of a challenge but it is something you need to do for your own future wellbeing. Whatever age you are it is not too late to start.
You can invest in stocks, bonds, mutual funds, certificates of deposit, and money market accounts without indicating to anybody that the returns on these investments are to be used for your retirement. You can also invest in property as a way of growing your portfolio, but obviously not as a ‘drip feed’ investment except through managed funds! Just remember to diversify and watch your money grow overtime.
Make use of retirement accounts through your employer such as the 401k in the US and KiwiSaver in New Zealand and make use of the special benefits each provides. Whatever retirement investment option you choose, just make sure you choose one and do not depend on social security, company retirement plans, or even inheritances that may or may not come through!
Take care of your financial future by investing in it today and… start investing at whatever age you are.