How Investing Today Can Help You Prosper in the Future

by Cents and Order | Last Updated: August 26, 2016

Let’s face it: nobody really wants to get old.

When you’re young, old age seems so far away. Thus, we tend to dismiss it. But once you graduate from high school, time flies by even faster than before. At least, that’s what happened to me.

Just the other day, I was thinking about when I was in high school when I realized it was more years ago than I remembered. This realization reminded me that I need to keep planning for the future, even when it feels so far away.

One way to do that is by investing your money wisely when you are young. Just in case you aren’t convinced yet, here are a few ways that investing today can help you prosper in the future.

Investing your money while you are young is a great way to ensure a prosperous future.

Time

The first and most obvious way investing now can help you in the future is time. Time is precious and you can’t get it back. The sooner you begin investing, whether it’s through a retirement account, real estate, or some other method, the more time you have to generate wealth to provide you with a secure future.

When you are young, time is on your side in terms of investing. If you start investing while you are young, you’ll quite obviously have more time to invest money. Even if you put away less per month than someone who is older, you can build more wealth by investing for a longer period of time.

Compounding Interest

When time is on your side, compounding interest can gain you a lot of momentum when it comes to your investment dollars too. The more time you have until retirement age, the longer you have to let your money grow.

For instance, if you invested $10,000 at 5% interest, you would have $10,500 at the end of one year. However, if you leave all of it invested, at the end of year two you would have $11,025. That means year one you gained $500, but year two you gained $525. At the end of year three you would have $11,576.25 for a gain of $551.25. As you can see, each year the gain increases, even if you don’t add any more money to your investment account. The more time you have for your initial investment to grow, the more wealth you’ll have later in life.

Better Spending Habits

Developing a habit takes time. By starting good spending habits at a young age, you can avoid accumulating debt and instead accumulate wealth. How can you do this? Pay your bills and debts off as soon as possible. This allows you to avoid or reduce the interest you pay on that debt. You’ll be able to use that money and make interest with investing instead of paying interest on debt.

Although no one really wants to be old, we are all headed that way anyway. If you begin planning for it earlier rather than later in life, you will have a larger amount of retirement income and a better quality of life as a result. So stop wasting time and get started. Your future self will thank you for it.

What other ways can you start investing today to help you prosper in the future?

Kayla is a personal finance blogger in her mid-20s who loves to write about money topics of all kinds.