Young Investors: The Benefits of Investing Early for Retirement

With age comes wisdom, but in investing, it is wise to invest before you age. In a recent WSFS Wealth survey of consumers in the greater Philadelphia region and Delaware, two-thirds of young people (67%) are concerned about outliving their money.

To overcome this fear, start investing at a young age and invest on a consistent basis to help achieve reasonable savings and net worth by retirement.

Oil prices up. Gold Soars. Great Depression. Market Crash. The 20th Century and the first 20 years of the 21st Century have seen its share of ups and downs. World Wars. 9/11. Covid-19. There always seems to be a reason to wait for a “better time” to invest in the markets.

Despite all these setbacks, the markets are currently near all-time highs.

A a young investor, there is almost NEVER a reason to not invest in markets. In the same WSFS Wealth Survey, young investors are the most risk tolerant, with almost half (46%) having a greater appetite for risk since the pandemic.

If you begin to invest at a young age, regardless of the current economic environment, the power of compounding investment returns over a lifetime should go a long way in helping you achieve your investment goals.

According to the WSFS Wealth Survey, over 66% of young investors plan to increase their investing in the next year.

Don’t delay, do it now! Why?

Looking at data going back to the 1930s, Wall St. strategist Savita Subramanian found that if an investor missed the S&P 500’s 10 best days in each decade, total returns would be just 17%, significantly below the over 16 THOUSAND percent return for investors who held steady through the downturns.^[1]

It’s time IN the market, not timing the market that should earn the highest returns.

Young people are confident in their knowledge about investing and more than 4 in 10 (44%) do their own investing per the WSFS Wealth Survey. The internet has certainly provided endless amounts of free investment advice and online investing is easy to transact.

This advice is helpful when markets are calm, but what happens when markets become volatile? Fear can trump common sense when markets are crashing leading to rash and often costly investment decisions.

If you are a young investor who may panic in difficult markets or you are not as confident in your investment acumen, an advisor with experience or wisdom (or both) can help you develop a plan, commit to consistently invest in the market and “stay the course” with current investments when markets are turbulent. This approach should help to ensure that your savings and net worth are there when you need them.