Your 20s are a critical time in your life that can be challenging to navigate, financially speaking.
You might be making the most money you’ve ever made in your life while also starting to pay for things you’ve never been responsible for before. Plus, you’re probably juggling a number of financial goals, from thinking about continuing your education to buying a home.
Where do you even begin?
“My best advice for people in their 20s when it comes to money is to set up an automatic investment,” Ramit Sethi, self-made millionaire and star of Netflix’s “How to Get Rich,” tells CNBC Make It.
Though it can feel like the cards are stacked against you in your 20s — you’re probably not earning as much as you will later on, you might be questioning your career choices, you’re likely facing a mountain of student debt — the one thing you absolutely have on your side is time. Which is why it’s so important to start investing as soon as possible.
Regularly investing might sound intimidating, especially if you’re living paycheck to paycheck, but Sethi says even a small recurring contribution can set you up for a bright future.
Why it’s smart to invest while you’re young
Generally speaking, the more time your money is invested, the better. Interest allows the money you invest to grow over time, and compound interest provides even more potential for your money to multiply. Not only does interest grow on your original investment, but on the returns on that investment as well.
That means the longer you’re able to keep your money invested, the more it will grow.
Secondly, the stock market isn’t always in the green. When recessions hit, your portfolio may be down for a couple of months, or years, at a time. But historically, it has always bounced back. Investing early gives your money more time to recover from the dips.
Automating your investments can help you make investing a habit. You can do this through payroll at your job or by setting up automatic transfers to your investment…
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