A person's early 20s is the best time to abuse their bodies. We can still go to work at 9AM after a night of partying, we can stay late to finish a report without any drawbacks, and we can drink all the coffee we want without thinking about heart palpitations.
Our bodies can take the occasional beating and recover if we change our ways early enough. Lucky for us, it's the same way with our wallets.
According to US-based financial think tank Financial Industry Regulatory Authority (Finra), millennials display low levels of financial literacy. This means our generation know very little when it comes to money matters.
Instead of wasting your moolah on transient things like the latest smartphones or a pair of trendy shoes, why not try long-term investments? For people who are really terrible in financial matters, there are experts who churn out sound advice we can learn from.
Heinz Buloz, editor-in-chief or MoneySense Magazine, says that the best time to save is in your early twenties because a lot of yuppies still live with their parents.
"Start investing early and more important do it regularly. You may not have a lot right now, but remember that time is on your side. Besides, you can afford to put in P1,000 or P2,000 a month. Hello! You’re still living with your parents! Your only expenses are for gas, lunch, chips, and deodorant," Buloz says.
But where do you put your monthly savings? Do you let it sit in the bank or can you let other people manage it? If you are a total noob when it comes to investing, there are two options that you can readily take advantage of without having to read much on it. Most insurance companies offer a package of insurance plus mutual fund investments. A lot of people also swear by Unit Investment Trust Funds or UITFs.
There are also dedicated people who can educate you on these matters like insurance or bank agents.
If you plan on taking the insurance+mutual fund route, there a few things you should know.
- Getting insurance is easier while you are young since because premiums are lower. An insurance company thinks that someone younger is less likely to develop medical complications.
- But investing in insurance is a gamble on "what ifs." What if you get sick? What if you get into an accident?
However, if you come from a well-off family that can cover medical expenses, then think about a better avenue to put your money. You might be better off investing in a UITF.
Why start early? Surely when you're 30 you have more money to spare?
The graph shows how interest compounds over time. A person who start saving Php1,000 per month at 15% at the age of 18 will reap more benefits compared to a person at age 28 saving the same amount.
We all have a choice to either invest now or invest later. With time on our side, don't you think sooner is better than later?