The average person thinks capital must be first accumulated and become stable in their 20s before beginning to invest, perhaps in their 30s. The opposite has been proved to be true. Time is the single most important factor when investing. Young people in their 20s have the most allotted time for taking risks and learning the market as they go to become a smarter, more innate investor says Chris.
Time allows an investment to grow bigger through compounding and re-investing. A 5% interest rate on an investment of $10,000 has the potential to grow exponentially times seven during a 40 year frame from the time someone is 20 years old. This means those $10,000 would have turned into $70,000 at age 60. However, compounding becomes less profitable as the allotted time for growth decreases. For the same $10,000 investment the end amount is cut almost by half if the investment time frame lessens by 10 years. Someone aged 30 would only make $40,000 out of those $10,000 by age 60. An investment’s exponential growth has the potential to double every 10 years (http://www.spoke.com/people/christopher-linkas-fortress-3e1429c09e597c1006eb4661).
Similarly, young people have the time to accumulate the human capital necessary to cover the loss of an investment. They can do more with their unrealized gain and take more risks when investing than a 40 year old. They can invest in a start-up company that was released this year in the market, or any company of sparking interest. Twenty somethings also seem to have an advantage in savvy investing progression. Chris Linkas, a noted investor and European head of credit in the UK stresses the fact that experience is the ultimate difference between a smart investor and an amateur. Chris is based off New York and is primarily an expert in real estate investments. Experience goes hand in hand with time spent investing. At their early stage of investing, younger folk have more room for mistakes, so they can study the market really well and lessen their investment risks. By the time they reach age 30, they will have a greater comprehension of companies worth investing in and market waves maneuvering.