A large number of big investors such as Warren Buffet have said that in life the earlier you start investing the better it is.
He is one of the richest men alive and what’s more amazing is that he started investing at an age of 11.
When you pass out of high school and go to college you may start earning money through some side hustles, part-time jobs, or work from home jobs.
Nowadays with the evolution of the internet, there are a lot of ways in which you can earn money as a student.
After you start earning a good amount of money, investing small amounts of it is a good option. This not only gives you experience related to investing but will also give you good returns.
Your twenties is probably the best time to start investing your money.
In this article, I will give you 5 reasons why you should start investing as a student or a recent graduate.
Now let’s try to understand each of these reasons in detail…
1. Power of Compounding
One of the main reasons you should start investing early is to utilize the power of compounding.
Compounding basically means reinvesting your earnings from the investment, thus giving you more returns.
This results in your return on investment increasing exponentially with time.
The more you start investing early the more you take advantage of this power of compounding and earn way more than those who start investing later in life.
2. Gain Financial Independence
When you start investing early in life your ability to gain financial Independence increases you learn a lot about personal finance that’s not taught in college
Learn a lot about how to do financial research read the balance sheet and assess risk.
You also learn how to manage your expenses and also increase your experience in investing
Learnings and experiences will help you a lot later on in your life
3. You have low expenses
It is always advisable to start investing when you are in college because in this phase of your life you have fewer financial responsibilities.
Usually, the majority of college students are unmarried and don’t have kids. So your expenses are low
Some of you might even get financial support from your family. So you have a surplus income even if it is from a part-time job.
Thus it is perfect to start investing at this stage of your life to understand and gain experience on how investing works.
4. Higher Risk-Taking Ability
When you start investing early in life you have a greater risk-taking ability
Even if you incur some losses, you have more time to recover them as you have years of earning ahead of you.
Also, as your financial responsibilities are low, you can play the riskier moves and gain more experience with time.
These are some of the reasons why you should start investing as a student or recent graduate.
If you are planning to start investing in the stock market, here are the 5 Best and Easy-to-use Stock Trading Apps that you can use.