A familiar catchphrase states “first come, first served,” while another adage states “the early bird gets the worm.” We may be hearing these phrases a lot, but there’s more to it than we understand. What’s more intriguing about these is that they can also be used in many aspects of life. If we think of the long-term application of these sayings, it can point to one thing, and that’s investment.
Investing early for your retirement might be the last thing on your mind, but the factors we will talk about in this post should suffice to help keep you going.
Four Reasons to Start Investing Early
As with anything in life, investing benefits from an early start. In the context of financial investment, early starters gain benefits and success. The earlier you make plans for your retirement, the higher your potential return on investment. Listed below are four important reasons why you need to start investing now.
1. Compound interest increases as you reinvest.
When you invest early, you are simply giving your money more time to increase and earn more returns. Between the time you are twenty-five and sixty, there are forty years in between, which is a lot of time if you continually reinvest and earn annual returns. For this reason, investors take the chance to employ a Surrey tax accountant to legally minimize their tax payables and maximize their capacity to invest more in the coming years.
As an example, let’s say you invest $20,000 today with a rate of 5% return; you will have $21,000 by the end of the year. If you continue to reinvest that cash while not withdrawing the $1000 you gained without doing anything, you will end up having $22,050 at the end of the second year. This time, you have made $1,050, which is $50 more than the return you have obtained from the first year.
The compound interest might appear small initially, but if you hold your investments with your earnings reinvested for the following 20 or 40 years, you will be amazed by the exponential rise of your return on investment. Due to this concept, many people seek financial advice in Surrey from wealth manager professionals to help them with their investment plans, such as growth stock mutual funds and real estate investing, making their money grow.
2. Gives you chances to take risks.
Riskier investments normally provide higher returns. Early investors have the advantage and chance to take more risks and gain better returns. Should they make wrong decisions, they have time to recover without affecting their long-term financial objectives, thus helping them to make riskier actions. Those who invest late in life are usually the ones who are extra cautious when investing their money.
3. Makes your spending habits better.
By investing early, you become disciplined with your spending choices, and you learn how to cut down expenses when most needed. This is difficult for people who make unneeded expenditures through careless buying. Lessons you have learned through investing early will pay off in the long run, particularly when you have bigger capital to work with, and self-control is important.
4. Gives you a step ahead of everyone else.
Investing earlier also means preparing yourself for financial hardships you may experience later in life. Many people try to prepare themselves for big-ticket expenses like marriage, house, children’s education, and much more, without any concrete plan. When you invest early, you are simply preparing yourself for your long-term goals and objectives. By investing in estate planning through trust management and advice in Surrey UK companies, you can better manage and secure your properties and assets.