After discussing a variety of topics, the conversation eventually came to investing and preparing for the future. He suggested that not many young people get involved with that, despite the many reasons they should.
He was more right than he could know.
I have always believed that one should begin saving as early as possible to prepare for what lies ahead. There is a variety of ways one may save. These include investing in stocks, mutual funds, bonds, and other such commodities. Furthermore, most companies offer 401K plans or other such retirement saving options.
The point is that with all these available options, there should be no reason that one cannot begin saving for retirement at an early age. Nevertheless, it seems that many young people do not have this on their minds.
I’ve seen many cases in which people in their 40s begin aggressively investing because they realize that their careers are coming to a close. Sadly, waiting that late to start investing will not get them anywhere near to what they could have been worth had they started saving in their 20s. Just do the research and math on compounding interest.
I would like to see by a show of hands how many college students out there have even let the thought of investing cross their minds.
I dare say that it’s the farthest thing from most college students’ minds.
In fact, I would venture to say that most college-age people have no concept of money at all.
Is it any wonder that thousands of college students fall into credit card debt each year?
If they truly understood money, then most cases of credit card debt would be entirely avoided.
Ladies and gentlemen, credit card debt could be an entirely different column within itself. The point of this example is to illustrate the lack of money sense that most college students possess.
Thus, it is no wonder that most young people make no effort to contribute to a savings plan.
Nevertheless, it does not have to be this way!
Young people need to be taught how to handle money and invest it wisely for their own futures’ sake.
Perhaps, there should be a seminar offered to teach students how to be prudent stewards of their cash flow. Furthermore, such a seminar should include teaching on how to begin wise investing at a relatively early age.
Imagine, for example, investing a lump sum of $10,000 such that it gains 15 percent interest per year. After 30 years, that sum has accumulated to more than $600,000.
Now, imagine an initial lump sum of a paltry $2,000 invested into an account with the same interest rate, but this time, you deposit an additional $2,000 per year.
After 30 years, the total account is worth more than $850,000. After 40 years, the total account would be worth in excess of $1.7 million. Notice that most of the growth occurs in the final years. Thus, the earlier one begins investing, the more wealth accumulates as one approaches retirement age.
Friends, the above was just a simple example of how investing early could result in mass quantities of cash by the time one retires.
It would be beneficial for each college student reading this column to begin a plan for investment.
Even if one can only begin with a meager $100, it will form investment habits that will be in place when one begins to earn more capital. And, in the end, one will not need to depend on a Social Security check to be their sole post-career income. Think about it.