| Young investors have a huge advantage that will | | | | the most beneficial to young investors is |
| allow them to secure their financial future without | | | | compounding interest. |
| much effort. There are basic lessons that will help | | | | Compounding interest occurs when you invest |
| secure your future and allow you to have more fun | | | | money and earn a return on what you invest. The |
| now. | | | | amount your investment returns then starts to earn |
| Social Security and pensions probably won't be | | | | you money. This forms a snowball affect that will |
| around when your teenager reaches retirement age. | | | | make your money grow bigger the longer you are |
| In the last ten years we've experienced a large | | | | invested. |
| reduction in pension plans offered to employees. | | | | To break it down, you're making money off the |
| Employers are replacing pension plans with | | | | interest your investment already paid you. Then you |
| contributory retirement programs. Unfortunately, | | | | continue to make money off the interest that you |
| according to a report of the National Association of | | | | made each year. That means your investments can |
| State Boards of Education, "most workers with | | | | grow faster and larger each year. |
| access to these contributory programs are not | | | | 2) Consistent, young, investment plan. Investing on a |
| participating sufficiently to allow them to retire in their | | | | consistent basis may allow you to generate long-term |
| sixties without suffering a great decrease in their | | | | gains over time. Most people agree, they will invest |
| standard of living." | | | | more consistently if the investment they choose is |
| This may mean that everyone under age 30 will need | | | | simple and something they understand; and |
| to self-fund their own retirement. In order to be | | | | consistency over time leads to financial security. |
| financially prepared, it is important they start investing | | | | Follow a consistent investment plan immediately; then |
| young and avoid financial pitfalls that plague many of | | | | as your investment knowledge grows you can add |
| their peers. This requires they learn the basic financial | | | | other forms of potential higher-return investments. |
| education skills so they are financially prepared. | | | | 3) Use investment vehicles that offer tax benefits |
| To be financially prepared for retirements today's | | | | -Roth IRA may allow you to withdraw money at |
| youth will need to have over a million dollars to be | | | | retirement tax-free. Most are unaware that forty |
| fully financially prepared for a self-funded retirement. | | | | percent of a persons income goes to pay taxes. You |
| After calculating the long-term inflation rate, a young | | | | will keep more of the money you earn by investing in |
| adult today will need over a million dollars in order to | | | | an IRA. |
| retire on an annual income of around $35,000 | | | | Diversification - For young investors the stock |
| (today's dollars, adjusted for inflation and salary | | | | market can be a great place to start investing. As |
| increases). This is assuming that they live to be | | | | your account size grows you could take some of |
| ninety years old. However, with the improvements in | | | | that money and move it into real estate or business |
| medicine, many experts feel we will live beyond that | | | | ventures. |
| mark, so just planning to live to 90 may not be | | | | Diversification lowers risk. For example, if you have |
| enough. And $35,000 annual income per year is not a | | | | 'all' your money invested in the stock market when |
| lot of money to enjoy the golden years. | | | | prices are declining then 'all' your money may decline |
| What's the answer? One answer may be a simple | | | | in value as well. Now if you diversify your holdings |
| investment of $100 per month starting at age 18. If | | | | and had a portion of your money invested in the |
| that investment earns a return similar to the | | | | stock market, some in the real estate market and |
| S&P 500 average over the past 82 years, they | | | | some in businesses you might avoid a big loss. |
| would have over a million dollars many years before | | | | The thought of funding one's own retirement makes |
| they reach retirement age. | | | | some people nervous but if people start young and |
| Have fun and retire young by following these simple | | | | stay consistent, today's generation will be able to |
| steps. | | | | afford the lifestyle they want now and through out |
| 1) Invest Young -There are powerful financial forces | | | | their life. |
| on your side when you start investing young. One of | | | | |