If you have finally reached your financial independence but still under the age of 30, you might be thinking what should you do to secure your financial future. You need to know that you are not the only one thinking deeply about that. This might be relieving. However the fact that you are not the only one doesn’t mean that you don’t need to take action.
What you need to learn if you are under the age of 30 and trying to reach the financial independence is the power of compound interest. No matter if your money is small or big, a well structured portfolio of stocks, bonds, real estate and private business can turn into a magnificent wealth.
Investing younger than 30 is giving you a great chance of building wealth
Let’s talk about it on an example:
A hard-working 18 year old with a income of $2,500 a month decides to save it’s $500 and put it into a portfolio of blue chip stocks. This is 20% of his income. The person in this example is also doesn’t increase the amount with the rate of inflation. With the result of holding these in long-term, he might expect to find himself owning over $7 million by his retirement.
On the other hand if a 40 year old person takes the same action and starts to save $500 a month for his portfolio, he will have over $600,000 by his retirement.
As you can see starting to take action and investing young can give you 90% more than you start at your 40.
So how should you invest before 30
There are some basic and essential actions you need to take if you want to build your own wealth. The action is building a solid investment portfolio. Your portfolio must include:
- Contribution to your 401K plan,
- Contribution to a Roth IRA,
- Turning Health Savings Account into a third IRA,
- Learn if you are entirely exempt at the Federal level from taxes on dividends and capital gains.