Why Should You Invest While You're Young?

Video Transcript

"Hello, my name is Roger Groh. We're here today to talk about why you should invest when you're young. Well if you think about it, today, if when you have excess cash and you're thinking about how to invest it, you have to think about overall rates of return from age 20, 25 to when you're 65 or 70, when you're really going to need that cash. What are you going to do with it? You have some choices. You can buy a treasury bill, today the rates of interest in treasury bills is zero. You can buy longer term treasury bills, 30 year type treasury bills and the rates of interest in those today is about 2%. You can buy a money market fund IE let your cash just sit there and you'll make around 1% in that if anything at all. You can buy metals but they go up and down and up and down and up and down and unless you're trading them like crazy, it's very difficult to make money. You can buy a house which would likely be a really good thing to buy for total return but also for the stability of your family. And that leaves a couple of other alternatives for what you can do, one of which is stock. Over the longer term, corporate profits in companies in the Standard and Poor's 500 have increased at about an 8% clip over the, since 1929. And you can type in that data and go and look it up. Our theory from an investing point of view is that if earnings did go up consistently at an 8% clip over the long term, in 10 years the value of what we bought today would be worth a lot more than it is now. The reason is that significantly increased cash flow results in significantly more value. So why invent today when you're young? It's because you have time to put up with the peaks and valleys that will inevitably come with long term investing but if you own a company that's consistent it terms of it's ability to deliver net income, over the longer term it will be worth a lot more than it is today and more importantly, worth more than most other asset classes that you can think of. I'm Roger Groh and that's why you should invest when you're young."