You’ve just graduated and you’re ready to take on the world…and that might not include thinking about your financial future. While the idea of setting aside chunks of money at such a young age probably doesn’t sound exciting, what if we told you if you start saving and investing now, you could have $100,000 by the time you turn 30? Now, that sounds pretty appealing, doesn’t it?
The sooner you start to save and invest, the better. Here’s why:
- It is easier to start saving when you are younger because young people (typically) have fewer expenses. This makes it easier to set aside funds compared to someone who has a number of bills to pay each month.
- Developing good savings habits early in life is beneficial to you in the long-run. If you develop the habit of always spending what you have, you will perpetually have nothing. As Warren Buffett (inspirational leader, chairman and CEO of Berkshire Hathaway) said, “the chains of habit are too light to be felt until they are too heavy to be broken.” In other words, any behaviour we develop and practice will become a part of us. Start learning good saving habits!
- By saving early, you get the benefit of “compound interest”. This is where the interest and principal are reinvested to earn even more interest. Earn interest on your interest! This allows someone to grow their investment even faster.
How do I get started?
Now, there are a number of ways to get started and it really depends on your circumstances. Often times, a tax-free savings account (TFSA) is a good starting point for young investors as an investment vehicle. Read more about TFSAs here!
How much should I be setting aside?
A common rule of thumb for new investors is to commit to saving 15% of their take-home pay.
For example: If you make an initial investment of $500.00 and continue to contribute $260.00 each month into a TFSA with an annual rate of return of 7%, you’ll be able to obtain that $100,000 goal by the age of 35.
Overall, we recommend starting saving and investing as early as possible, so that the benefit from compound interest works in their favour.
Once you’ve started earning an income, its time to get some advice on how best to put an investment plan in place suited to your own unique circumstances. A Westoba Financial Planner/Advisor can work with you to put a plan in place, with the right investment solutions, to help you achieve financial success.
Get started today!
Call 1-877-WESTOBA (937-8622) or meet with us today!