Many people consider investing as a daunting, complex and risky task, and that it is better not to get involved. Investing is indeed time-consuming and labor-intensive, and it will naturally be much easier not to think about it. That’s why people would find reasons to justify their non-investment behavior, and the most common one is that they are still young. Such views mislead many young people into thinking that investing is the prerogative of seniors or professionals, not their own. This article will list some of the reasons people often use to justify their delaying or avoiding investing.
"I don't have enough money"
It’s true that young people are often heavily indebted—credit card debt, car mortgages, and home loans—but most can still save a small amount of money each month or year to invest. Besides, there are a lot of investment products to choose from. A basic pension insurance plan is one of the good choices, which can provide certain guarantee for life after retirement with only a small monthly payment. Compounding interest is a great opportunity for young investors, especially those with tight budgets. Another thing you need to know: investing does not require you to have multiple positions; a small amount of stocks may bring you good returns.
"I know nothing about investing"
Lack of understanding is not an excuse for avoiding investment. Young people have time to study investment techniques and develop investment strategies that suit them. Most of them are well educated and can obtain information from many sources, such as specialized financial websites, investment knowledge exchange websites, social media pages, webinars and many advanced trading platforms. Most of these resources are free or costs only a small monthly fee.
"The investment risk is too high"
Seeing the devastation brought by the economic crisis, many young people may feel that the investment risk is too high and beyond their control. Although investment is risky, we can still control investment risk within an acceptable range through proper risk management. However, the size of this range varies from person to person. Risk-averse young investors can choose conservative portfolios like blue-chip stocks and bonds; risk-oriented investors can choose aggressive portfolios that deliver relatively high returns.
"Wait until I'm older "
Compared to older investors, young people can get more returns on less money, all thanks to compounding interest. If a person starts investing 100 yuan per month (the total investment is 54,000 yuan) at the age of 20, calculated at an annual interest rate of 5%, by the time he (she) is 65 years old, he or she will have more than 200,000 yuan. If the person starts investing at the age of 40, he will have to save 334 yuan per month (total investment of 100,200 yuan) to reach an asset of 200,000 yuan at the age of 65.
"Investment is only for seniors and fund managers"
Although the media often describe successful investors as wise old men or professional investment institutions, most investors are in fact ordinary people, young or old, rich or poor. We often hear people say "it's never too late to invest (or save for retirement)", but the opposite holds true: it's never too early to invest.
"I only need the basic pension plan"
Relying entirely on social security and basic pension plans is risky. We cannot predict what social security will look like in the future. We are living in an aging society, and there may be a huge gap between pension income and expenditure in the future. The best way to prepare for old age is to invest in a planned way from a young age and to reduce risk through portfolio management.
Young people are faced with many temptations, and they have little time to think carefully about investing. In addition to being busy with social events, work or hobbies, they are often burdened with heavy debts. It seems that investing should be slowed down. However, in fact, compared with people who procrastinate, those who start investing at a young age have a greater advantage, because they will enjoy the advantages of compound interest, and they are more risk-tolerant.