Investment isn’t something that’s taught in school (unless you get a degree in finance). It’s something most of us didn’t learn from our parents. As such, most people who want to become investors have to seek out this information on our own. Many people have questions about the best age at which to start investing. There are basically two ways to answer this question: the Snarky Way and the Realistic Way. First, the snark.
The best age at which to start investing is when you are about an hour old. This allows you your entire lifetime to watch your investments grow, maximizing the potential of compound interest, and allowing you to become reasonably wealthy within your lifetime if you keep up your contributions. The thing is, most people don’t start investment when they are an hour old. There is an increasing movement among Millennial parents to start investments on behalf of their young children.
If you are lucky enough to have parents who did this for you, you are likely already reaping the benefits of their forethought. But most of our parents didn’t invest for us. This brings us to the Realistic Way, mentioned above, and it’s a bit hardest to suss out. Lottosend conducted a survey with 1500 respondents asking at what age they thought people should begin investing. Their responses were as follows:
Overall Results
20’s 59.7%
30’s 22.4%
40’s 8.7%
50’s 9.2%
Most people understand that the more time an investment is allowed to grow, the larger it is liable to become. But most people also don’t have very much extra income to devote to investments. Most people have to wait until later in life, when careers and personal lifestyles are more stable, to begin investing in earnest. Many factors make it easier to invest as a mature adult. In addition to what has already been said, many people have employer matched 401(k) plans, allowing them tax protected investments and an employer who doubles every dollar they contribute.
Most young people don’t have options like this. But because “the sooner the better” is always true with investment, young people should figure out how to accelerate the time when the start their first investment plan. In most cases, high-interest and medium-interest debt should be paid off before investments are made in earnest. Because debts like these will lose money much faster than an investment is likely to grow in value, fast growing debt will negate the benefit of investment. You should also save for emergencies before you invest. An emergency fund that is large enough to cover your expenses in the event of a job loss or personal emergency will allow you to invest without worrying that the money you are putting away cannot be missed.
There’s an old saying that may be the best answer to this question, though it was written about the best time to plant a tree: “The best time is twenty years ago; the second best time is today.” Don’t be discouraged if you don’t have investments maturing, just start as soon as you can.
