Your 20’s is the best time for you to invest in your future. Now, you have perhaps graduated from the university, and you have a job that pays a decent wage. At this point, there is no spouse to please, no mortgage to cover, nor school fees, day-care, and upkeep to worry about for your kids that are yet to be born. In many ways, this is the freest time of your life, and perhaps the only time you will ever be free from responsibilities.
But if you are wise, you’ll see your 20’s more as a time to set yourself up for life than an opportunity to be extravagant and rascally. It is, in fact, a time for you to lay down the foundations of the kind of lifestyle you want to enjoy later in life. Here are some tips that can help you make the right investment decisions in your 20’s:

The Power of Compound Interest:

When you are in your twenties, it’s very easy to get complacent about investing, because you think your life has just started, so why the rush to start piling up money for the future? Sadly, a delay in getting your financial acts together can have far reaching consequences.

Mitchell Bloom, a financial advisor, explains below the importance of investing early:

Let’s say you invest $300 per month starting at age 20 and don’t stop until you’re 60-years-old. If you managed an 8 percent return during that time, you would have more than $1 million dollars in that account alone. Now let’s say you waited until you were 30 to get started. By the time you reached 60-years-old, you would only have $440,445 in your account. Those first ten years you missed out on would cost you more than $550,000 in returns – even though you only skipped $36,000 and ten years of deposits!’

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This is the magic of compound interest, something Albert Einstein once called the eighth wonder of the world. Compound interest is the type of interest you accrue when the interest you earn on your savings or investments begins to compound on itself.

Impulse is Your Enemy:

See investing as part of a bigger financial plan. Investing early is a great step for wealth creation, however, it is not the ultimate route in securing your future. You have to take care of your spending habits because you can’t invest your way out of a bad spending habit. You have to make a deliberate effort to cut down on your debts accumulation, and run a regime of savings and tight budgeting. This way, you can prevent wastage.

Take Control of your Money: if you are interested in building wealth in your 20’s, you must start early in life  to see money as a tool, and take control of it to achieve your goals for a financially secured future. Instead of seeing money as the solution to your problems, regard it as a tool you can use to create the lifestyle you want through smart choices on savings, spending, and investing.

Increase your savings as you age: while in your twenties, you will have a plethora of goals to save for. A new car, a visit to the Grand Canyon or the Eiffel Tower,  a new home; these are probably the things you want to save for. But financial advisors think that you should start by investing gradually, then you should increase your investments as you age. This will allow you to save for retirement while also allowing you to attain other goals. As your salary increases, you must increase the percentage of your savings. This will benefit you in the long run.

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Don’t Get into a Competition with the Joneses: don’t try to keep up with the Joneses. Unfortunately, the fear of missing out drives many young people to try to keep up appearances. This can lead to the depletion of your savings on unnecessary things, and even incurring debts for the future. Stay away from distractions from friends and you are on your way to a secured financial life.