When it comes to building wealth, the question isn’t just how much you invest, but when you start. Early investors who consistently set aside small amounts often outperform the late starters with larger contributions. Why? Starting to invest earlier in life develops a mindset that treats investing as paying your future self, creates habits that weather increasing financial demands, and gives your money the maximum time to grow.

While most of us understand that more time means more money, practical barriers — student debt, market fears, the allure of immediate gratification — often delay this critical first step. 

We’ll help you understand these challenges and implement strategies to overcome them, so you can position yourself for long-term financial success without sacrificing your quality of life.

Why Start Early?

Time is truly the most powerful factor in building wealth. When investments have decades to grow, the results can be astonishing. 

Build Healthy Financial Habits

Starting early allows you to establish consistent investing habits before major financial commitments arise. As we progress through adulthood, financial responsibilities tend to multiply — mortgages, student loan payments, family expenses, and more. By creating strong investing habits in your twenties, the process becomes automatic, like a non-negotiable “bill” you pay to yourself before other expenses compete for your resources.

Take Advantage of the Luxury of Time

When you’re decades away from needing your investments, temporary market downturns become opportunities rather than crises. With 40+ years before retirement, market fluctuations along the way aren’t just manageable — they’re expected and can even be beneficial through dollar-cost averaging. 

Start Small to Make a Big Difference

Perhaps most importantly, beginning early means you don’t need to invest large sums to make a significant impact. Starting with $25-50 per paycheck is perfectly acceptable. These modest contributions, given enough time to grow, can develop into substantial wealth. 

Common Barriers to Early Investing

While the benefits of early investing are clear, several obstacles often prevent young adults from taking this crucial first step toward financial security.

Financial Pressures and Debt

Student loan debt creates significant pressure on young professionals, often making investing seem impossible. With the average federal student loan debt balance more than $38,000, monthly loan payments can consume funds that might otherwise go toward investments. Additionally, rising house costs, healthcare expenses, and day-to-day living expenses further strain limited resources.

Lack of Financial Education

Many people simply don’t understand how investing works. The terminology feels like a foreign language, the process seems intimidating, and without guidance, the whole process appears risky or confusing. Most parents don’t teach their children about investing, often because they weren’t taught themselves. Meanwhile, school systems rarely provide comprehensive financial education, leaving young adults unprepared for even basic investment decisions. With neither home nor school offering directions, many find themselves in their twenties or thirties with no clear starting point.

Many also believe they need substantial amounts to begin investing — a misconception that can lead to postponement, waiting for that “someday” when they’ll have enough to start. This delay sacrifices their most valuable asset: time for their investments to grow.

Prioritizing Present Enjoyment Over Future Security

The choice between enjoying life now versus sacrificing for a retirement decades away isn’t easy. Whether it’s dining out, traveling, shopping, or enjoying entertainment subscriptions, these present-day lifestyle choices directly compete with future financial security. It’s human nature to choose the instant gratification you can see and feel over a benefit that seems ages away.

First Steps for New Investors

Getting started with investing doesn’t need to be complicated. These foundational steps will help you begin your investment journey with confidence and establish habits that will benefit you for decades to come.

1. Start with Emergency Savings

Before venturing into investments, establish a solid emergency fund covering three to six months of living expenses. This financial cushion protects your investments by preventing you from needing to withdraw funds during a market downturn to cover unexpected costs. Keep these funds in a high-yield savings account where they remain liquid and accessible when needed while still earning some interest. 

2. Take Advantage of Employer Retirement Plans

If your employer offers a retirement plan like a 401(k), make this your first investment destination, especially if they provide matching contributions. Employer matches represent immediate, guaranteed returns on your investment — essentially free money that no other investment vehicle can match. Start by contributing at least enough to capture the full employer match, then increase your contribution percentage gradually as your income grows.

3. Consider Opening a Roth IRA

A Roth IRA offers unique tax advantages that make it particularly valuable for young investors. Contributions are made with after-tax dollars, but growth and qualified withdrawals are completely tax-free. Additionally, you can withdraw your original contributions (though not earnings) without penalties if absolutely necessary, providing flexibility that other retirement accounts lack. The current annual contribution limit makes this an accessible option for beginning investors. 

4. Choose Simple, Diversified Investments

For beginners, broad-based index funds provide instant diversification and professional management at minimal cost. Consider starting with a total stock market index fund, which provides exposure to thousands of companies through a single investment. This approach eliminates the need to select individual stocks while providing broad market exposure that has historically delivered solid long-term returns. 

Special Considerations for Young Investors

The investing landscape offers unique advantages to those who start early, creating opportunities unavailable to older investors:

  • Embrace appropriate risk: While market volatility may seem frightening, younger investors can generally afford to take on more growth-oriented investments. With decades before retirement, temporary market swings become blips in a long-term upward trajectory.
  • Investment options for minors: Even teenagers can begin investing with the proper structure. Minors who hold some kind of employment can open custodial accounts like UGMA/UTMA accounts or even Custodial Roth IRAs with parental assistance.
  • Family support opportunities: Parents and grandparents can accelerate a young person’s financial journey through strategic gifting. For example, a relative could gift funds to match a young person’s earnings, allowing them to preserve their wages for immediate needs while still funding their future. This approach effectively doubles the impact of a young person’s work while teaching valuable financial lessons about saving and investing.
  • Dollar-cost averaging benefits: Small, regular contributions work exceptionally well for young investors thanks to dollar-cost averaging — automatically buying more shares when prices are low and fewer when prices are high. This strategy reduces the impact of market timing and potentially lowers the average cost per share over time. 
  • Financial education resources: Young investors have unprecedented access to financial education through podcasts, TikTok, investing apps, and online courses designed for beginners. Taking advantage of these resources creates a foundation of knowledge that compounds alongside investments, leading to more confident decision-making throughout life.

Investing Early: The Gift that Keeps on Giving

The journey to financial independence begins with a single step — one that’s best taken early. Paying your future self first makes investing a simple habit that builds wealth almost automatically over time. While obstacles exist, the path forward is clear: start small and stay consistent. 

At Premier Financial Group, we’re committed to guiding you through every stage of your investment journey, from your first contribution to retirement and beyond. Our experienced advisors can help you navigate market complexities and build a personalized strategy that grows with you. Your future self will thank you for the decisions you make today!