When it comes to growing your wealth, one of the most common questions people ask is at what age can you start investing? The good news is there is no perfect age to start. Likewise, there are no time limits on starting an investment strategy. In short, the best time to start investing is right now, regardless of how young or mature you are.
Key takeaways:
- It's never too early or too late to invest, but how you invest will depend on your age.
- Investing in your 20s: You have a long time to invest before retirement, so you can take more risks and be more aggressive in your investment strategy.
- Investing in your 30s: You can estimate around 30 years until retirement, which leaves you plenty of time to take risks while still paying attention to your retirement goals.
- Investing in your 40s: You definitely aren't running out of time to invest, but it's a good idea to buckle down and get serious about building wealth for retirement.
- Investing in your 50s: It's typically best to adopt a more conservative investment strategy as you approach your retirement years.
Investing is for all ages
You can start investing at any age, but your investment strategy might look different depending on where you are in your life.
If you're a young investor
When you're young and just starting out, you have more time to adjust your investment strategy. That means you have the flexibility to explore investment options that might be less predictable, with more ups and downs.
Investments like these can sometimes yield higher returns if the investment swings in your favor. For example, buying and selling stocks can be a smart investment strategy for a younger investor, as you have more time to recover from swings in the stock market.
If you're in the middle
If you're an investor approaching middle age, you might want a mix of investments that let you take some risks while keeping other parts of your investment portfolio on more solid footing.
There is no single correct way to invest. Instead, you should create an investment strategy that suits your unique goals.
This is why it's important to learn as much as you can about investing so you can feel confident about your choices.
If you're a mature investor
If you're a more mature investor, you might want to pull back from more volatile types of investments in favor of more conservative investment strategies. This is because older investors are typically trying to save for retirement, and you want those funds to be protected as you near the age where you need to depend on them for living expenses.
Types of investments
There are many different types of investments out there, and you'll want to adjust your investment strategy depending on your age. While certain investment types and opportunities are location-specific, here's a quick overview of a small sampling of investments you might want to include in your portfolio.
- Stocks: Other types of investments are more stable, but stocks have the potential for higher returns, which you can reinvest.
- Bonds: Governments or corporations sell bonds to raise funds. By buying a bond, you’re “loaning” the issuer money that they agree to pay you back at a certain point in the future. As a result of this arrangement, the issuer regularly pays you interest on the amount—two times per year, for example.
- Real estate: Real estate can be a good investment, as most homes will gain value over time. You might even consider buying a property you can rent out, which will generate passive income.
- REITs: Real estate investment trusts (REITs) pool money from many investors and use it to invest in real estate that generates income. This allows investors to make money from real estate without having to buy it or manage it on their own. Some REITs are publicly traded while others are not. You can invest in a REIT by purchasing shares just as you would with stocks.
- Cryptocurrency: You can think of cryptocurrency as digital “tokens” that can be used to purchase goods and services online, or to trade for profit. To buy crypto, you’ll need an online wallet—an app where you can keep your digital currency. Some cryptocurrencies can be bought with traditional currency (such as dollars), but others can only be purchased with another type of cryptocurrency. To trade, you can create an account on a cryptocurrency trading exchange platform, such as Coinbase, Cash App, or Binance. If you decide to invest in crypto, just keep in mind that it can be very volatile.
This is by no means an exhaustive list of investment options. Furthermore, many of these investments can be tailored to fit your age range and your specific needs.
Start investing today
It's never too early to learn about investing. Whether you want to grow your wealth, save for retirement, or simply improve your financial literacy, Baraka has the resources you need to meet your goals.
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