Why Should Youth Focus On Passive Investing?
The right time to invest can be confusing, especially if you want to invest but do not know when to start. Let us guide you in the right direction. A lot of surveys and studies indicate that you will get richer if you invest early. A good time to invest is when you are in your twenties after you finish your graduation.
During this stage of life, you learn the importance of financial independence and discipline. Early investments teach you the difference between investments and saving. You are never too young to invest, so never consider your age a barrier. Investing a little now will generate more returns for you down the road.
This blog will help you understand what passive investing is and why it is a wise idea to start investing at an early age. Let’s get started…
What is Passive Investing?
Real estate passive investing is a way to supplement your income without being actively involved in the actual deal. This includes finding the right property, negotiating the price and arranging the loan, finding other investors, managing the property, and ultimately selling it. Essentially, it’s a “buy-and-hold” strategy, in which the rental property is purchased with the intent of holding on to it for some time to generate passive income through rents. You can bypass all this work and still benefit from investing in real estate passively.
People, regardless of age, typically lack the expertise and time to put together a successful real estate deal and do all the work required to make it happen. Most passive investors invest with sponsors, often referred to as syndicators, to avoid these hassles. Sponsors are lead investors with the knowledge and experience to locate real estate assets, perform the due diligence necessary for a good investment, and put together the deal with other investors.
Why is investment at an early age a great idea?
The following reasons suggest that investment at an early age is a great idea:
More time to recover:
- If you invest early and incur a loss, you would have more time to recoup the loss. Also, your investment will be able to grow in value for a longer period by investing early.
More savings:
- Investing early in life develops the habit of saving more. In the long run, investing more pays off. If you follow this thought process, you tend to save more by reducing unnecessary expenses and redirecting the money saved to investments.
Develops risk-taking ability:
Studies prove that the risk-taking ability of young investors is higher than that of older ones. They prefer stability and are generally conservative, so they tend to avoid high-risk investments. If you are willing to take risks, you can earn handsome returns at an early age. As the old saying goes, more risk, more reward.
Time value of money:
Investments made early compound over time. Over time, the value of money increases. Investing at a young age can result in huge benefits at retirement. Moreover, early investment allows you to enter the world of finance sooner. With time, your money will grow. With early investments, you can afford things that others might not, at that age. By investing at a younger age, you are ahead of others.
Safe future:
Life will present you with situations when you will have to borrow urgent funds to meet unavoidable expenses. When such times arise, early investments can help you get through the tough times alone. By investing early, you will have less need to borrow money from others.
Become creditor :
Investing at an early age is indeed beneficial. When you have surplus money invested, you will have the resources and money to fund your needs and even lend money. Investing money in the right avenues at the right age enables you to become a creditor.
Supplement your retirement plans:
The earlier you start the better it is. The biggest risk is not taking action. Investments made at a young age increase the chances of financial stability. The younger you start saving for retirement, the better. After retirement, life is more challenging than ever before, so planning for retirement now will lead to a happier retirement.
Conclusion
Investing in real estate sooner will enable you to build wealth and plan for an earlier retirement. Imagine being able to retire at 50, or even earlier. You would be able to pursue your passions and have enough money to live comfortably without having to work for someone else. That’s the aim. If you have the desire, you can accomplish whatever you are willing to do to get there!
In case you are considering investing in real estate, you do not have to do it alone. Through strategic, large multifamily investments, Blue Ocean Capital works with accredited investors to grow their wealth. To learn more, feel free to reach out to us today.
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