Money management and playing the stock market are often associated with individuals in their 30s, 40s, and 50s, but some experts advise interested investors to start much earlier. While it may seem like a very complicated prospect, investing young – even as a kid – can bring about many financial rewards if handled properly.
Here are some reasons to why learning to invest early in life can be very beneficial:
- More Time to Build the Nest Egg. Most people simply don’t think about making investments until they have a job that offers 401k stock options. Even then, many people don’t take the idea seriously. And some don’t realize until they’re near retirement that they should have been building that nest egg – too little, too late. However, those who learned from their parents to invest their allowance and birthday money at an early age can build up a very secure nest egg.
- Investing Young Offers More Time to Learn. Practice makes perfect in all situations, and this is the case with money management. Anyone who is actively involved in the stock market can tell you that he or she did not become savvy overnight. It took years of learning, asking questions, and trusting instincts. By starting at an early age when actively learning is an everyday occurrence, by the time students actually need their money, they’ll be old pros at the game.
- Starting Early Counteracts the Market’s Ups an Downs. As the recent recession has shown us, the market can plunge to depths that result in billions of dollars in loss in one day. While devastating losses are not common, it has happened before and will likely happen again. Long-time investors understand this happens and simply wait for the upswing. This is definitely a benefit that someone who starts early can take advantage of.
Investing young brings about numerous benefits and an enormous wealth of knowledge in relation to money management. So if your child comes to you wanting to learn about financial planning, don’t shy away from it. With responsible education at the helm, your child will be on track to a financially abundant future.