Image source: http://i2.wp.com/www.bizepic.com/wp-content/uploads/2014/06/young-entrepreneurs-2.jpg?resize=795%2C500
Just by following a consistent investment plan you could be enjoying the freedom that comes with being a young millionaire. A simple investment, in the overall stock market, could help you to retire young. Consider these examples:
- $149 invested each month starting when your 18 years old could make you a young millionaire at age 52.
- $687 invested each month starting when your 18 years old could make you a young millionaire at age 40.
Financially educated youth have tremendous advantages that average young adults don't have. Just by being aware that you can retire young with a simple investment strategy is enough to encourage some to take the necessary steps to reach young millionaire status.
Becoming a young millionaire is easy when you start young because you have the power of 'compounding interest' on your side. Compounding interest is defined as the interest earned from the initial money you personally invested plus the interest earned from the amount your investments have already returned. To clarify, the money that you already made from your investments starts to earn you money. So, year after year, you're making money off money you already made.
Investing young allows you to get the maximum benefit from compounding interest. Because you're making money (earning a return) on what your investments have already paid you, the younger you start the faster and larger your investment account may grow. That's why investing young gives you a huge advantage.
1) Savings. The first step on the road to becoming a young millionaire is to set up a simple savings plan. Pay yourself first by setting money aside into an investment before you start spending your paycheck. Getting in the habit of paying yourself first will benefit you your entire life and will help you retire young.
2) Invest young. Don't get caught up in thinking 'investing' is hard; it's actually easy. There are simple investments, available to the inexperienced, that will get you started investing young.
The stock market offers some investment vehicles that are lower-risk while offering the potential for long-term gains. One type of investment vehicle is known as broad based market index investments. These are investments in the overall market like the S&P 500 and NASDQ 100. For example, you can invest in all 500 stocks of the S&P 500 with one simple investment index investment vehicle. The S&P 500 index is one way for the non-professional investor, that doesn't have a lot of knowledge or time, to profit from the stock market.
3) Consistency. Simplicity equals consistency; and consistency is a major factor in becoming a young millionaire. Choosing a simple investment vehicle is the first step. Next it's simple a matter of modifying your investment account so your make consistent investments automatically.
