Ahh... youth. For us millennials, its the time when we're all starting to work, earn a monthly income, and enjoy life! We have no responsibilities, no commitments, no pressure. We have all the time in the world and this is the best time when we can party, and enjoy our youth to the fullest.
Then, time comes creeping up. Slowly. Silently. Next thing you know, you're in debt trying to pay off your credit card bills and student loan, you're living on paycheck to paycheck, and you have plans on getting married, but all you have is RM2500 in your bank account. Also, you can't continue to afford feeding your pet octopus rubies every week.
At some point in our lives, we will all come to the realization that living in the present is not what is all hyped up to be. Mine came last year, when my manager at that time threatened my job security, dangling my salary up in the air. I felt helpless and that's when I knew I will never allow anyone to have that kind of power over me again. I wanted to be financially free, with multiple sources of income, never depending on anyone again.
No matter where you start, or how much you're making, anyone can invest and grow their wealth - with the right attitude. Here's why you should start ASAP, even when you're broke.
1. It helps you develop the right discipline - for life
Too often, I find that most of my peers tend to live off their monthly paycheck, waiting in anxiety for the next one to come, before spending it all in the blink of an eye. I do admit, however, that the current economy is tough, with the rising costs and stagnant growth of income, anybody could go broke.
But with the right habit and discipline, anyone can grow their wealth, no matter how small you start. I remember as a teen, I've always wanted to own a red Mini Cooper S (still do, actually). I'd keep every single allowance I've collected and even worked part time for it until I eventually accumulated a saving capital of 5-figures. Even though I was bad at accounting, I still made sure I wrote down every single cent that goes into my hidden stash and how much I took out. I trusted no one.
Unfortunately, I was very financially illiterate and I knew nothing about growing my wealth. By the time I went into college, I spent on useless stuff recklessly and nearly spent away most of my savings.
But here's the thing. If a teenager, who hardly earns a thing could save up to that much of a capital, why can't you? By developing a certain level of discipline, you will find that you're increasing your net worth every day - even if you're putting aside RM100 a month.
2. You can make as many mistakes as you can
There's a huge advantage when time is on your side; mistakes are more forgiving on you. Take for example, you lost RM10,000 at 28. With your youth and employability, you'll still be able to bounce back as compared to a retiree at 60.
I remember losing RM3000 over a mistake I made once. At that time, that was A LOT to me and I felt so bad about it. But when I look back at it now, I prefer to see it as a valuable lesson worth RM3000. Plus, as you fail more in life, you gain invaluable experiences no money or courses could ever give you. By the time you're at your prime at 30, you'd already be a pro in the game.
3. No commitments
For most of us in our 20's, I assume that we don't have much commitments in life; no spouse, no kids, no mortgage, etc. When you live for yourself, this is the absolute best time for you to develop yourself and grow your wealth. Why? Because nobody depends on you and so you are able to dedicate more of your income to your savings and wealth.
Once you start having a family, your time and money is needed to sustain them. If you've never grown your wealth before, this would be even more difficult for you. Of course, having a family is one of the reasons why you'd wanna grow your wealth, but that's why its always best to start young, when you can fail with no pressure. What's there to lose anyway?
4. You may lose out on opportunity costs
So you're young and broke. There's no way you can possibly invest, so might as well save whatever you can and put it into the bank account as a fixed deposit so there's NO WAY you can lose money, right?
Yes and no.
Thing is, you may not necessarily lose your money, but in time, you can certainly lose out in the value of your money. Why? Inflation, that's why. If you think about it, the value of our money tends to depreciate over the years. Take for example, RM100. Back then, you can shop for a whole trolley full of groceries. Now what can you buy at the store for just RM100? Maybe cat treats, and some milk if you're lucky.
With the annual inflation rate in Malaysia since the 70's, it increases by 3.65% on average. That's way more than you can hope for even from a fixed deposit account, let alone a savings account. By staying out of the game of investment young, you're certainly losing out. In fact, you're potentially losing money that way.
5. You learn to be tough as nails
Investing is scary. Nobody who has ever gotten into it thinks that its gonna be easy. But it takes balls to have the courage to take the first steps forward. Once you have that going, you build your confidence, and should you ever face the down times, you know you'll be able to pick yourself up and soldier on.
I was never a gambler. I hate taking risks and I've always had the fear of losing. Every Chinese New Year, I'm always the first to opt out of the gambling games and prefer to watch my cousins play. "Well," said my dad. "Obviously, you're not very interested in winning either."
And that really clicked in my head. If I wanted to win, I need to take risks, even if there's a potential of losing. So that's what got me started in the world of investments.
Want to get started in investing but don't know where to start? I'll share my experience on what I did to get started in my next write up, so stay tuned!
In the meantime, test your financial literacy here. Apparently, two-thirds of the world can't pass this simple 5-question test. Let's see how Malaysia fares and let me know how you did!
Anne is the author and founder of this blog. She likes to write about current issues, travels, food and the general struggles of a millennial.