William Schantz believes that if you want to build wealth, it’s never too early or too late to start investing. When you’re young, you have many years to compound your investments and let them grow faster than older investors. Additionally, investing while you are young means that if you make mistakes, it will be easier to recover from them than if you were to start later in life.
With that in mind, here are some reasons William Schantz suggests you should start investing while you’re young.
William Schantz 4 Reasons to Start Investing Early
1. The Gains Will More Than Offset the Cost
The more time your money has to compound (grow), the greater your returns will be.
William Schantz suggests that it is vital to keep in mind that one reason stocks and other investments tend to grow faster than inflation is interest. Even if you only earn 3% on your money, you’ll still come out ahead compared with earning nothing in a savings account. If you invest $1,000 for a year at 3%, you’ll end up with about $1,030 after a year. So even if an investment’s return isn’t high enough to beat inflation over long periods of time, it can still be worth it from a day-to-day perspective by keeping up with inflation.
2. You Have Your Whole Life Ahead of You
It might sound obvious, but starting to invest while you’re young gives you a chance to get in on some of those sweet, sweet stock market gains before they evaporate. Let’s say that when you turn 20, an S&P 500 index fund is at $50 per share. If you put $5,000 into it and never touch it again for 30 years, your investment would be worth about $190,000.
According to William Schantz, if you start investing at age 25, you still have plenty of time to watch and learn from your mistakes—and put in that same amount each year for 30 years, your investment would be worth more than half a million dollars: almost double what it would have been if you started 10 years earlier.
3. Compound Interest Is Powerful
If you put off investing until your retirement years, you could be missing out on serious gains. Compound interest is the process of earning interest on previously earned interest, and it’s one of the investment’s biggest perks.
With compound interest, small returns can actually grow into huge gains over time – putting money to work as soon as possible is an important factor in reaching your long-term financial goals.
4. Asset Allocation Doesn’t Have to Be Complex
As a young investor, it’s essential to understand that investing is not about getting every last percentage point of return on your money. As you become older and have more significant balances, you can optimize for higher returns. However, as a younger investor, keeping things simple and allocating your money across a handful of broad asset classes can keep things affordable while still giving you access to a range of investments. There are two basic options for broad asset allocation: Target-date funds or diversified index funds.
William Schantz Recommends You to Invest Early
Although most Americans say they believe in investing, very few actually do. In fact, about half of Americans have less than $5,000 saved for retirement, and half don’t have any retirement savings at all! If you want to retire comfortably and maintain your standard of living through your golden years, William Schantz recommends you start investing now.
