Regardless of what anyone says, everybody wants to be rich. It is just that few people really stop to consider what it takes to get there. Often, by the time experience teaches a person what it takes to get rich, it is too late for them to accomplish the feat. Experience is a cruel teacher dolling out information just a fraction of a second beyond the time when we needed it. If you want to accumulate wealth, use someone else’s experience. What every piece of borrowed experience tells us is that the surest and easiest way to achieve wealth is to start young. Here are three reasons why that seems to be the case:
Time for Education
The young generally have time for education: a luxury in which many older people cannot indulge. Instead of getting married fresh out of high school, or backpacking across Europe, a young person could opt to stay in school and build a solid foundation of wealth education as did David Johnson, Cane Bay Partners. He is the holder of multiple degrees, including an MBA from Georgia State.
Beyond twenty something, multiple degrees in anything become unrealistic. Among other reasons, the brain is less elastic. There are physiological reasons why young minds tend to learn new things more readily. Waiting until learning becomes a challenge is a bad idea when a solid education really matters. Those who have the time to learn about money are the ones most likely to accumulate it.
It’s simple enough math. To accumulate the same amount of wealth, a younger person can make smaller investments than an older person. Those smaller investments will still pay off bigger in the long run because of the magic of compound interest. The more time one invests, the bigger the payoff.
There is also the matter of risk. A young person can make safer investments that grow in small but steady amounts over time. An older investor has to take more risks to make up for the loss of time.
As a board member of Junior Achievement, Kirk Chewing, Cane Bay Partners is highly invested in making sure young people make the right financial decisions while they are young enough for those decisions to pay off.
It Is Easier to Recover from Mistakes
Physically, young people have a seemingly magical power of healing. They can break a bone one week, and be back on the playground the next. Past forty, forget about it. Recoverability is one of the best things about youth. It is possible to bounce back from almost anything, including this list of money mistakes to avoid in your 20s.
Even people with solid financial educations and sound investment strategies make mistakes. Make the wrong kind of mistake too late in life, and the chances of recovery are slim. Make that same mistake when young, and you still have time to shrug it off like the fading memory of an unpleasant dream.
None of this is to say that one cannot become fabulously wealthy if they don’t get the process started fresh out of the delivery room. It is just to say that accumulating wealth, like almost everything else, is considerably more difficult if you don’t get an early start. A good formula is to accumulate your wealth when you are young enough to do it. So that you will have it when you are old enough to handle it.
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