The younger you start taking care of your finances, the better your chances of fast-tracking your way to financial success, according to Tlalane Ntuli, Chief Marketing Officer at Metropolitan.
One of the ways that young people can take steps towards financial success is to start investing their money.
Starting to invest your money when you are younger gives you the opportunity to significantly grow your money and beat inflation, says Sebastian Pillay, head of Share Investing at FNB Wealth and Investments.
Pillay says time in the market as well as a well-diversified portfolio are the most valuable elements of any investment plan.
"The majority of investors say their secret to success is a long-term approach with quantifiable goals, which is why starting your investment journey early in life can be one of the wisest moves you can make," Pillay says.
Pillay offers advice to help aspiring young investors:
Have many eggs, in many baskets
Diversification is one of the most valuable keys to investment success.
Pillay recommends that young investors take a balanced approach to building their share portfolio by including a variety of asset types (shares, bonds, property, etc.) as well as investing in shares with different geographical and currency exposures.
"Full diversification can take time to achieve, but if you are able to build up a well-diversified portfolio over time, you will protect your overall investment value from large volatility swings, which can take time to recover".
ETFs (exchange-traded funds) are a great investment vehicle for young investors, and people should consider making this the core of their portfolio because ETFs offer diversification.
Playing the long game
Time in the market or a long investment horizon is valuable to the investment process. Patience, consistency, and self-education are important for investing and achieving long-term goals. The best way to do that is by having a clear investment objective.
"The most successful investors know what they are investing for, and unless that long-term objective changes, don’t fiddle too much with your investment portfolio—even when the market heads south for a time," Pillay said.
Invest with your head, and your heart
Investment decisions should be based on thorough research and a good understanding of the shares and companies you invest in.
Just because an investor watches a particular streaming channel doesn’t mean that the company is the best investment. However, it is also important to invest in ‘stories’ you believe in.
Pillay says if you have a passion for ESG (environment, social, and governance) value factors, an investment in a company that takes these ethical considerations into account can contribute to making a meaningful difference with your investment decisions.
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