Grant Meintjes, Executive at Nedbank Private Wealth, is working to break down the barriers that are holding young professional South Africans back from enjoying the many benefits of being investors. We urge our Private Wealth clients to share these insights with the young people they know and care about.

‘Despite being in the early stages of your career and earnings, you have a secret weapon for building wealth,’ Meintjes says, ‘and that weapon is time. By harnessing the power of compound growth and forming good financial habits now, you can lay the foundations for a lifetime of financial freedom.’

Here are five reasons why young people should start investing early.

1. You can start small.
   There's a perception that you first need to earn a big salary before you can start accumulating wealth, Meintjes says. But that's simply not true if you start young. He provides an example: If you sacrificed 1 takeout meal a month and instead invested R300 a month at a 7% annual return, after 10 years you’d have over R51 000. Keep that up for 40 years, and your small monthly takeout sacrifice will earn you R750 000. Best of all, R600 000 will be interest – essentially free money!
   
   
2. Investing is more accessible than ever before.
   Technology has made investing incredibly easy and very affordable. There are even digital platforms and products that are specifically designed for young investors, allowing them to start building an investment portfolio with as little as R100. One example is the Nedbank Stockbroking for Young Investors offering. If you're between 18 and 25, you can use the digital platform to invest in top JSE shares or diversified exchange-traded funds (ETFs) while paying reduced broker fees of just 0.25%.
   
   
3. You build a habit of financial discipline.
   Meintjes points out that investing is a powerful tool for instilling good financial habits that will benefit you for life. ‘When you prioritise investing overspending, you become more mindful of your income and expenses,’ he explains, ‘and that leads you to becoming better at budgeting, reducing expenses, and directing money towards your financial goals.’ By starting this process at a young age, you develop the discipline and financial skills that will put you ahead.
   
   
4. You can take more (calculated) risks.
   As a young investor, you have the time to bounce back from a poor decision, market downturn or investment loss. ‘When retirement is still decades away, you can afford to take on higher-risk, higher-return investments,’ says Meintjes. ‘While reckless risks should still be avoided, you don’t have to be overly conservative when you have a 40+ year investment horizon, so you can take advantage of your youth to invest aggressively and earn strong returns over the long run.
   
   
5. You get to harness the full power of compounding.
   When you invest money and reinvest the growth, you earn returns not just on your initial investment but also on the money you reinvest. Think of it as earning growth on your growth. And every month, the cycle repeats – creating a snowball effect where your money grows exponentially over time, so even small amounts invested consistently from an early age can balloon into massive investment balances over decades.

We are building wealth early.

As a young investor, the following tips should help you manage your investments more effectively:
 

1. Tackle high-cost debt first.
   If you have high-cost debt (a credit card balance you don’t pay off in full every month), you should tackle that before investing large amounts. It’s also a good idea to start an emergency savings fund to cover your expenses – like rent, food and any loan repayments – for a few months in case you lose your job and need to find another. When the fund is big enough, you can redirect the amount you add to it monthly into other investments.
   
   
2. Educate yourself.
   Plenty of online and other educational resources are out there to give you a grounding in the basics before you start your investment journey.
   
   
3. Find mentors.
   There will be people you work with or in your profession who have been through what you’re about to embark on. Don’t be afraid to contact them for advice and assistance.
   
   
4. Understand why you’re investing.
   Many young investors get caught up in seeing returns and stock performances grow while the companies they invest in do well. But the point of investing is the life outcomes it will make possible, like buying a home or having enough for retirement. Keep your investment goals in mind rather than focusing on the day-to-day performance of your portfolio.

Seizing opportunities

If you’ve decided to embark on your investment journey early, remember to focus on balancing risk and potential returns, seek out mentorship from experienced professionals, and understand the destination you’d like your investment journey to lead to. ‘With highly accessible solutions like the Nedbank Stockbroking for Young Investors product, there’s no excuse for not becoming an investor,’ Meintjes says, ‘and if you leap now, you can be sure your future self will be very grateful.’

Want to know more? 

Here’s what to do:

• Contact your wealth manager.
• If you’re not a client yet and want to learn more about how we can help you, we would love to hear from you. Call us on 0860 111 263 or complete an online contact form. 
• To find out more about our Young Investor Offering, click here.

Legal Line/Disclaimer
This information is for general information purposes only and is not legal advice.