The REAL Reason Why You Should Start Investing In Your 20’s, And What You Need To Do If You Didn’t

Drop by any investing seminar and you’ll most likely find a room filled with middle-aged working adults or retirees looking to invest their savings.

Now, we all know that the best time to start investing is as early as possible.

However, most young adults don’t consider investing until they hit their mid-30s.

Many of us fail to recognize how much an impact it would make to invest a few years earlier (hint: it can actually make you a lot richer, as you’ll see later on).

This is due to the power of compound interest – your money makes you some money, which in turn makes you even more money, ad infinitum.

This brings us to the question: why don’t young people invest?

Here’re some of the few possible reasons.

 1. They don’t see the value in investing

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By its nature, investing requires you to make short-term sacrifices to experience long-term gains.

But in our current society, everything is about debt funding and instant gratification isn’t it?

We use credit cards as if we already have the money.

Dave Ramsey, author of The Total Money Makeover has this interesting quote,

“we buy things we don’t need with money we don’t have to impress people we don’t like”.

 2. They think that they don’t have enough money to invest

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It doesn’t matter how much money you’re earning, because the truth is, setting aside money to invest is never easy, initially.

We all heard stories of high-flying executives who went bankrupt because of huge personal debt and expenses.

And at the same time, virtually all self-made millionaire investors start out with very little capital.

It’s absurd to think that you’ll only invest after you’ve gained wealth, because the wealth part only comes after investing.

You might not be earning a lot at this moment yet (especially if you’ve just started working), but ask any seasoned investor and they’ll tell you that your 20’s is probably the best time in your life to start.

Think about it – you don’t have much family commitments yet, and you’re probably still living with your parents.

I’m afraid if you wait, the situation is only going to get a lot worse.

The best time to start is NOW

 3. Fear that they’ll lose everything

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Investing can make you extremely wealthy (virtually all wealthy people have some form of investment), but it can also ruin your life, if you don’t know what you’re doing.

Many Singaporeans have the belief that investing in the stock market is extremely risky, and unfortunately, they probably got it from their well-meaning parents.

And this belief is further strengthened whenever they watch news about stock market crashes, or hear of others who have lost their entire fortune on bad investments.

That’s why you should never invest without first having the right investing knowledge.

And once you have a firm foundation about the basics of investing, you’ll realize that it’s actually not as scary as you originally thought it was.

 Who makes more money?

Consider two brothers – John and Ben.

Both are 26 years old and have just graduated from a local university. Both got a job with a $3,000 salary, and both brothers want to retire by age 55.

John knows the true value of investing and the implications of starting early, hence, he sets aside part of his salary to invest.

He takes out $500 a month ($6,000 a year) for 10 years, and let the money sit in his investments for another 20 years until he is 55 years old.

Ben also knows the importance of investing.

But he is more focused with satisfying his current wants and desires instead of planning for the long term, and he always give the excuse that he’ll do it later.

After much procrastination, Ben eventually starts investing at 36 years old.

He invests $500 every month for 20 years, until he is 55.

Now, Ben invested twice the amount money as compared to John.

How much money does he eventually make?

Let’s find out!

Doing the math

Let’s assume that both brothers are able to achieve an average of 10% return on their investment.

John: From age 26, he invested $500 a month ($6,000 a year) for 10 years, and then leaves it to sit for the next 20 years.

Although he only invested $60,000, he would actually have accumulated $707,646 in assets by the time he is 55.

Ben: After finally starting at age 36, he invests $500 a month for 20 years, putting in twice the amount of money as John.

Now, because Ben started later than John, his investments only managed to make him $377,415.

Just because of a mere 10-year difference (starting at age 35 isn’t uncommon), Ben only managed to make half of what John made, even though he invested twice the amount of money.

John was able to achieve 4X higher return on investment.

This is the power of compounding.

And if John was smart, he would’ve continued investing beyond the first 10 years.

If he did that, he would have accumulated well over $1 million by the time he reaches 55 years old, allowing him to retire comfortably.

He would continue to make almost another $2 million in the next 10 years.     

And that’s not even including the dividends.

What can you do if you haven’t started investing in your 20’s?

Now, the concept of investing is actually pretty simple.

Your Net Worth = Principal x (1 + ROI)Time

Here, you can see that your net worth increases exponentially over time.

However, we cannot turn back the clock and make you young again (if you’ve passed your 20’s).

And you can’t drastically increase your principal (the original amount invested) as well because it’s probably limited to your income or savings.

Hence, the best way for you to make up for lost time is to find a way to increase your ROI (return on investment).

 Your most important investment is…

… your financial education

Benjamin Franklin once said, “an investment in knowledge pays the best interest”.

Jumping with both feet into the world of investing without first equipping yourself with the right knowledge and skills is shooting yourself in the foot.

If you’re completely new to investing, you should find a reputable training company to learn the fundamentals about the type of investment you’ve chosen.

The average returns on the STI (Straits Times Index) excluding dividend yield has been just under 10%.

However, there’re many people who’re consistently making over 25% returns from the stock market every year.

Those people have invested in their financial education, and now they’re reaping the fruits of their labour.

If you want to learn how you can achieve those high returns for yourself, I would like to recommend you to a workshop organized by

This full-day workshop is called Value Investing Unleashed, and it’s conducted by Ken Chee, one of the most well-known investors in Singapore.

In the workshop, you’ll discover how average Singaporeans are making Warren Buffett-type returns from the stock market.

Simply click here right now to find out more about the workshop and take advantage of the awesome price (trust me, it’s really awesome).

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Shawn Lee

Shawn is a writer for When he's not writing, he enjoys reading about the latest in psychology and personal development. Beneath his reserved demeanour, he's secretly a fanboy who goes crazy whenever he sees his favourite idols. He also loves anime, music and everything Japanese.

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