When should I start investing?

Why should I start building a passive income early in life? I want to enjoy doing fun activities now, and save money later! While that does make sense, have you ever thought about the fact that you can make your wealth grow exponentially? Look at these examples:

“I am 25 years old right now and I will invest $1000 once.”

Safe investing: $5.500 once you’re 60
Risk investing: $28.000 once you’re 60

“I am 25 years old right now and I will start investing $100 each month.”

Safe investing: $111.000 once you’re 60
Risk investing: $342.500 once you’re 60

But wait, I didn’t start that early… is there anything in it for me?

“I am 40 years old right now and I will invest $1000 once.”

Safe investing: $2.500 once you’re 60
Risk investing: $6.500 once you’re 60

“I am 40 years old right now and I will start investing $100 each month.”

Safe investing: $40.500 once you’re 60
Risk investing: $72.500 once you’re 60

Start right now!

As you can see in the examples above; the earlier you start, the larger your gains. Let’s stress the “should I really start right now” just a little more by looking at this comparison:

“I am 24 years old and I will start investing $100 each month.”

Expected wealth at 60: $378.000 once you’re 60

“I am 25 years old and I will start investing $100 each month.”

Expected wealth at 60: $342.500 once you’re 60

Waiting just one year when you’re 24 years old while investing $100 each month (which saves you $1.200 at the time) will make a difference of over $35.000 once you’re 60!

Imagine what you can do with $1.200;

Now imagine what you can do with $35.000;

  • Buy a new car;
  • One year of life expenses.

No time to wait, you can of course start investing in peer to peer loans or one of many other possibilities. Share yours in the comments!

6 thoughts on “When should I start investing?

  1. This is crucial stuff that a lot of people don’t know, thanks for getting the word out there! Great examples that really motivate. I am lucky to have had this in the back of my head for a few years, and now that I am 19, the age I can start investing in Canada, I hope to really get to it! Hope you can begin investing successfully! What’s the amount of risk you are willing to take?

    Like

    • Great to read such a positive comment, thanks! I’m aiming for 7-13% interest right now. Depending on how this goes for the next couple of years, that will probably change the way I invest in the future. For now, I try to find projects, stocks, etc. that give a good return on investment with a not too high risk.

      I get to this 7-13% interest by spreading my investments. Some of my investments have an interest rate of 4-6% (low risk) and some have a higher interest rate of about 14-15% (higher risk).

      I think the keyword in my own strategy is spreading. I never put more than $100 in the same “thing” (whether it’s a stock, project, loan, anything). If I believe something can’t fail – I find something similar. Always, always, always spread!

      Liked by 1 person

      • You sound like you know exactly what you are doing! Diversification is pretty important, great advice. That is how I plan to pursue peer to peer lending (among other things, of course). To invest the same in to each loan I choose, never get too stingy with the lower rates, or too greedy with the more risky and higher return loans. Really excited to follow you through your journey!

        Like

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