Sadly, the researches by multiple experts in the field of investment show that young individuals are less likely to invest in their portfolio. The majority of the young working class (20-35) allocate the largest amount of their portfolio in cash. This is a tremendous error for anyone, but especially for the young folks. It is a mistake because if we are not investing that money, we are losing it. Inflation is most of the time growing, and if our investment returns don’t exceed inflationary amounts, we are not breaking even. For young investors, time is in their favour, and the longer time you have the more potential for your assets to grow.

Let’s take the following example to prove this point; John is born on January 1, 2000. He gets a job when he is 20 and works until he is 70 if he deposits 1000 euros every year in an investment that has a return of 10% per year. He will be a millionaire by the time he retires with a future accumulation value of 1,280,299.38 euros, by January 1, 2070. But, if he starts saving when he is 30, with the same criteria: 1000 euros per year and 10% investment return, he will only have a future accumulation value of 486.851.81 euros, by January 1, 2070, which is less than half compared to the first situation, in which he started investing from the early age of 20. This concept is known as Recurring Investment, and could be a great tool to add assets to your portfolio. Thus, if John lives longer and is able to save for 100 years, his savings will amount to a total of 151,575,735.74 euros, by 2120. This is 118 more times than what he would have earned compared to 50 years savings.

In a nutshell, the way of growing our assets in an exponential way is by starting to invest at the earliest possible. If John decided to save his cash only, he would have needed to save 2,134 euros per month or 25,606 euros per year to earn the same amount by 2070, which is very difficult. Thus, the way of becoming wealthy is being smart when it comes to managing your assets, and not by simply having a higher salary. This is why John opted for investment.

Although retirement may be a long way off for us young people, we need to think about it. Malta is imposing tax breaks for workers who save for retirement, and hence we need to acknowledge that we may not be able to continue working. Feeling secure at that point in life means having enough assets to keep the same standard of living as before, by saving them beforehand.

Whether you are young or old, start investing. Time is a crucial factor of how wealthy you are. Finally, look for professional advice so to make the most possible maximisation out of your earnings.

Disclaimer: This article was issued by Bernardo Serrano Vazquez, Investment Management Support Officer at Calamatta Cuschieri. For more information visit, The information, view and opinions provided in this article is being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice. Calamatta Cuschieri Investment Services Ltd has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website.


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