When Time Is On Your Side
Investing when time is on your side is the absolutely best time to achieve your life's dreams and goals. It can mean the difference between an easy or difficult path your life will take. And while it may be the time in your life when you have the least amount of money, the time factor more than makes up for that. The miracle of compounding interest--a fundamental theme that runs through financial planning--can take a seemingly inconsequential investment and turn it into a major nest egg.
Another factor in your favor during the younger part of your life is that you can afford to take more risks--you can invest in riskier, and therefore higher yielding, investments, simply because you have the time to recoup your losses elsewhere if your investment goes bust. Again, this potentially greater return makes the most out of investing even small sums.
There you have it, the best of both worlds. Safer investments with lower risks and therefore lower returns have the time to build up into a substantial account. If you have a higher risk tolerance, you can invest in the riskier vehicles that older investors don't have time to take a shot at.
Sounds great, doesn't it? There's only one problem--the large majority of people at this point in their lives don't bother investing at all! They're too busy spending everything they make because they're "too young" to worry about investing. After all they're just starting to live--making and spending their own money--and they can barely make ends meet whether they're earning $20,000 or over $100,000 annually.
Remember, try your hardest to invest something, no matter how small it may seem, into the vehicle of your choice when time is on your side. The one thing we can promise you is that, before you know it, you'll find yourself in the middle stage of your life.
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Financial Calculators
Use this Asset Allocator Calculator to help create a balanced portfolio of investments. Your age, ability to tolerate risk, and several other factors are used to calculate a desirable mix of stocks, bonds and cash. The calculated asset allocation is a great place to start your analysis in building a balanced portfolio. Click on the "View Report" button for a detailed look at your results.
Meeting your long-term investment goal is dependent on a number of factors. This not only includes your investment capital and rate of return, but inflation, taxes and your time horizon. Use this Investment Returns Calculator to help you sort through these factors and determine your bottom line. Click the "View Report" button for a detailed look at the results.
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Investment vehicles that may be appropriate at this point of your life:
- Stocks
- Bonds
- Mutual funds
- Educational investing
- Real estate
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