Skip to Content (press ENTER)

3 Reasons Why You Should Start Investing Young

Being a young investor might be the smartest move you’ll ever make.

The Alaska USA Financial Planning & Investment Services program is offered through CUNA Brokerage Services, Inc.*, a broker/dealer focused on serving credit union members. CUNA Brokerage Services, Inc. is an affiliate of CUNA Mutual Group. For more information about CUNA Brokerage Services, Inc., please visit


Invest young for financial freedom when you’re older

Getting started with investing in your 20s is easier than you might think, and your future self is going to thank you for it. Here are three solid reasons to invest young.

1. Compound Interest (AKA, The BIG One)

Investing when you’re young can give you a massive increase in the amount of money you have when you’re older.

That may seem obvious at first glance, but we’re not talking about savings that are only dependent on how much you put in—we’re talking about compound interest. Compound interest is where you reinvest the money you’ve earned from your investments, back into your investments. This creates a snowball effect with your money so it picks up speed as it grows. The longer you’re able to keep compounding interest, the more money you’ll be able to grow. A lot more.

Let’s say you’ve put together $500 you want to invest (saving $30-$50 a month for a year), and have decided you can probably swing an additional $500 a year until you’re 60. Great!

Check out the difference between investing a set amount of money when you're 20, versus when you're 40.


$500/year at 6% interest from age 40 to age 60 = $21,099.93

$500/year at 6% interest from age 20 to age 60 = $87,166.70


You would end up with more than 4X the amount of money by starting early! That’s the power of compound interest and investing young. Even better? As you advance in your career and earn more money, you’ll have even more to invest.

Financial professionals recommend putting 10-15% of your income towards retirement. That may seem like a lot of money now, but it will become an easier goal to reach as you advance in your career.

2. Resiliency and Risk Tolerance

Investments have ups and downs, and any financial professional will tell you the best way through a volatile market is to ride it out. Economic conditions have a way of smoothing themselves out.  What many people don’t realize is that age is an important factor to consider when weighing risks in investing. Younger people can undertake more aggressive portfolios with generally higher rates of return, because they have longer to ride out rough patches in the economy before they reach the age of retirement. Higher risks equal higher rewards—if you’ve got enough time for your portfolio to work through the economy’s ups and downs.

3 Reasons Why You Should Start Investing Young

3. Opportunity

Life changes fast—faster than you might think. There are countless stories of people reaching middle age and suddenly realizing they’ve done almost nothing to save for their future. Not a great feeling.

Starting your investment journey when you’re young gives you greater command over what your future looks like. It gives you options. Having a lot of money doesn’t mean you have to stop working, but wouldn’t you rather be able to make the choice yourself? There are many people that don’t have any option but to keep working because they’ve got minimal retirement funding.

How do I start investing when I’m young?

Mike Klopfer, a Certified Financial Planner for Alaska USA Financial Planning and Investment Services with more than 15 years of experience has some smart advice for getting started in investing when you’re young.

“I know young people are getting pretty tired of hearing people tell them to cut out their morning coffee in order to start saving,” says Mike. “I’m a firm believer that you don’t have to make yourself miserable to plan for your future.”

“One of the easiest things you can do is to take advantage of an employer matched 401(k), if your job offers one. Let’s say you make $30,000 a year and contribute 1% of your income—around $300 a year. You probably won’t even notice it’s gone from your paycheck, and you’ve already started growing some money.”

“Now you might not have a 401(k) option, or you might be thinking what if I need that $300? My car has been making a strange noise lately... I get it. I’ve been there. If you’re hesitant to lock up your money that way, why not set up your banking app to make an automatic $20 transfer from checking to savings every 2 weeks. That way the money is still accessible, but by the end of the year you’ve got $500 to work with, either as an emergency fund or something that generates interest like an IRA.”

What do I invest in when I’m young?

When starting out, there are several good options to consider guiding your money into.

  • 401(k)s, especially if employer matched—don’t pass up on free money!
  • Roth IRAs are often recommended for younger investors because they’re taxed on contribution, not when you withdraw for retirement. That saves money, because you’ll likely be in a higher tax bracket when you’re an older worker.
  • CDs and Money Market accounts are both very safe options that offer a higher rate of return than a standard savings account. Both are good choices to keep and grow emergency funds in.
  • Home buying is a big step in life, but if you’re going to be staying in the same place for the foreseeable future—more than 5 years—it can be a better option than renting because you’ll start to build equity.

You’re not in it alone

Managing your finances properly can feel a bit lonely. Am I making the right decision? What if I’m missing out on a better option because I’m new to investing? Alaska USA Financial Planning & Investment Services has a team of expert financial professionals dedicated helping you make smart, deliberate decisions about your financial future—so you’re never alone when it comes to your money. To learn more visit


Representatives are registered, securities sold, advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer and investment advisor, D/B/A Alaska USA Financial Planning & Investment Services, which is not an affiliate of the credit union. CBSI is under contract with the financial institution to make securities available to members. Not NCUA/NCUSIF/FDIC insured, May Lose Value, No Financial Institution Guarantee. Not a deposit of any financial institution. CUNA Brokerage Services, Inc. is a registered broker/dealer in all fifty States of the United States of America. #FR-3270600.1-1020-1122 Exp. 11/05/2022

Readers also liked...

You're About to Leave

You are about to visit a third-party website not operated by Alaska USA Federal Credit Union.

Alaska USA Federal Credit Union is not responsible for the product, service, or website content on any external third-party sites and does not represent either you or the website operator if you enter into a transaction. Alaska USA Federal Credit Union's privacy and security policies do not apply to the linked site.

Continue to site OR, CANCEL