Einstein once said that the greatest force in the universe is compound interest. And it is easy to see what he was getting at: Any method of making money that grows over time will be valuable eventually, even if it is not valuable immediately. And if it is valuable immediately, then it will be obscenely valuable later on. But when is the best time to get the ball rolling on that?
Well, the easy answer is “as soon as possible”. The equation of growing your money involves the base amount that you start at, the rate of growth, the growth of the growth, and the amount of time that it spends growing.
The big issue is that last number. It is the most important number in the equation, but it is also the one that you have the least control over. And that gives us a few things to talk about.
First, we will talk about what is the best age to start investing in real estate. But since the answer to that question is exactly what you think it is, we will then move on from that.
Second, we will talk about what it means to start investing in real estate at different ages. Not everyone is going to be able to invest in real estate right out of the womb.
Let’s get started.
What is the Best Early Start for Investing in Real Estate?
We talked about starting to invest as early as possible being the best course of action, but that statement is worthy of some elaboration. After all, there are some ages and economic circumstances where investing earlier is basically impossible, even if it seems like it is possible.
What we mean by that is this: A baby does not have money to its name. If a one-year-old is “investing” it is because their parents are investing on their behalf. You would be hard-pressed to find an infant with the cognitive abilities to navigate the real estate market.
That whole thought is so obvious as to be silly, but it is worth noting as a logical starting point for talking about how early is “too early” to start investing. One thing we can discern straight away is that there is a point where one’s brain is not developed enough to invest properly.
So, at what age is one’s brain “developed” enough to learn and practice investment? Sadly, it changes from person to person. Some people do have a natural affinity for it, meaning that they might be able to start learning as early as their teens. But it won’t click for most until their 20s.
This is why the whole subject is worth discussing: One’s investments are a strictly rational math problem, but one’s ability to start investing is based in completely irrational and inconsistent human development. Only once you can overcome that obstacle can you invest.
The Economic Obstacle
But there is a second obstacle that is not known to everyone but is obvious to most: Economic position. Simply put, one’s socioeconomic status is going to determine how easily they can get into real estate investiture when they are young.
You can get invested into real estate at a pretty low price with a pretty low return. Some firms will get you set up with paying $500 into them with a pretty good interest rate. Basically, you loan them money and they pay it back to you. The downside to these cheaper options is their risk. The loan might never get paid back if the business fails. But at least the option is there.
The trouble is that the really profitable ventures take more than $50,000 of investment or more. There are tons of people who will have enough trouble saving $500, much less $5,000. This is the main reason why people do not invest in real estate.
The end result of these two points is that the best time to invest is in your late 20s, and the amount of money you need to invest in order to get started is somewhere north of $500. Of course, the amount of money you need will change on location. Some places are cheaper.
Investing After Your 20s
While investing in your 30s or even older than your 40s means that your investments will have less time to grow before you die, there is a big advantage to investing later in life: You have a greater principle. The rate of growth and the amount of time your money spends growing are both critical to investments. But as discussed before, so is the size of your initial investment.
Most people arrive at 40 years old with enough money to at least make a cheap investment. And even if they don’t, they at least have the ability to make that money. Even if you are somehow a 50 year old who has only ever worked in fast food, you still have a chance.
Older people are more frequently given promotions and bonuses than younger people in the same circumstances. They are also considered far more reliable when it comes to paying off loans. This means you can get a loan that you can invest into a real estate investment such as for instance a new apartment for sale in Paranhos.
Really, you have tons of investment opportunities after your 20s even if you did not get started till then. The truth of the matter is that the culture is just weird about how young people handle their money. Lots of assertions are thrown around about what young people should do.
But just because people do not talk about what a 50 year old should do, that does not mean you lack for opportunities to turn your excess income into a passive income opportunity.
Conclusion
There are lots of layers to understanding how real estate investment works. If you want to know more, consider learning from Teifke Real Estate. You can visit their website here.
Remember, you are never too young to at least start learning. And you are never too old to at least starting practicing.
