Investing while young

Investing in the stock market can be an excellent way for young people to build long-term wealth and secure their financial futures. While it may seem intimidating to get started, there are many benefits to investing early in life.

One of the most significant advantages of investing in the stock market while young, is the power of compounding. By investing early and consistently, you can take advantage of the fact that your returns will earn returns of their own over time.

This compounding effect can lead to significant growth in your investment portfolio over the long term. For example, investing Ksh.3,000 a month when you are 20 versus when you are 35 in an investment that earns 10% return; means cashing in an extra Ksh.5 million in interest on your 50th birthday.

Another benefit of investing in the stock market as a young person is that you have time on your side to make up for any losses.

Young people typically have longer investment horizons, meaning you can afford to take more risks and weather short-term market negative fluctuations in your investments. This can open opportunities to invest in higher-risk, higher-reward assets such as stocks, which have historically delivered strong returns over the long term.

Of course, investing in the stock market does come with risks. It's important to do your research and understand the potential risks and rewards of any investment before committing your hard-earned money. One way to mitigate risk is to diversify your portfolio by investing in a mix of different stocks, bonds, and other assets.

Ultimately, investing in the stock market when young can be an excellent way to set yourself up for long-term financial success. Nowadays investing in the stock market is as easy as downloading a mobile App like the AIB DigiTrader App on your phone, opening a trading account and starting to invest.

By starting early and being consistent, you can take advantage of the power of compounding and build a diversified portfolio that can weather market fluctuations and deliver strong returns over time.