For many young people today, the realization of how inflated the economy is has become practically second nature. Everything feels expensive, jobs are scarce, and almost everyone will tell you that the best way to survive is to start something of your own. Unfortunately, startups can turn into bottomless pits where money goes to die. Sure, we’ve all got big ideas, but the capital to actually implement them is another story altogether.
Because of this, many youth have found solace in alternative sources of income. Crypto and fractional share purchases have become a go-to for many, using whatever small income they can access to make a profit, often boosted by the exchange rate between the Ugandan shilling and stronger currencies like the dollar. So today, I think it’s only fair we get deeper into why investing in your 20s might just be the best thing a young person can do to secure their future.
What Exactly Is Investing, Anyway?
Let’s break it down. Investing is essentially putting your money to work. Instead of letting it sit idle in a bank account where it earns next to nothing, you place it in assets, like stocks, bonds, real estate, or even crypto, with the hope that its value will grow over time. The difference between investing and saving is that investing involves risk but with the possibility of higher long-term rewards whereas saving, well, this is just storing money for later.
Think of investing as planting a tree. You nurture it, give it time, and eventually it grows to bear fruit. The earlier you plant that tree, the sooner you will enjoy its shade and fruit in the future.
Why Should You Start Investing in Your 20s?
Time is your best friend
In your 20s, time is on your side, add compound interest to that, which is basically earning returns on your returns, even small amounts can grow into something massive if given enough time. Investing early means you don’t have to break the bank each month because your money will do the heavy lifting over the years.
Look at it this way: you want to retire with, let’s say, 20 million. If you are 20 years old and plan to retire at 60, you have 40 years to save. If you simply saved without any investment growth (0% appreciation), you’d need to put away about 41,700 per month. But thanks to compound interest, investing your savings can make a big difference. With a moderate annual return of 5%, you’d only need to save roughly 13,800 per month, and with a more aggressive 8% return, about 5,800 per month could get you to the same goal. That’s the power of compound interest working over time, as opposed to starting at age 45, where you’d have to set aside about 333,000 per month with no investment, around 175,000 per month with 5% returns, or roughly 120,000 per month with 8% returns to reach that same 20 million.
You can afford to take more risks
Let’s face it, your 20s are the perfect time to experiment and even mess up. If you lose money, you’ve got years ahead to recover. So much so, we the youth, have many slogans we use when we are about to squander our money: You Only Live Once, Life is Short… This risk tolerance allows us to explore growth investments like stocks, ETFs, or even cryptocurrency without the crushing pressure of immediate financial obligations. Add the numerous social media influences enlightening many youths to get rich, to “lock-in” and “get their sh*t together,” many are more likely to gamble on investments that lets say spending more on a budding relationship.
You build lifelong money habits
Learning to invest early sets the tone for how you’ll handle money in your 30s, 40s, and beyond. It helps you develop financial discipline, skills like budgeting, researching, staying consistent, and tracking your growth. These habits compound just like your investments, and indeed, they set you apart from your fellow youth.
Beat inflation
Uganda’s economy (and much of the world) has seen significant inflation. Investing is one of the best ways to stay ahead of rising costs instead of letting your cash lose value in a traditional savings account.
Employer and tax benefits
If you have access to retirement savings vehicles, for example, a pension scheme or voluntary savings plan, investing early lets you take full advantage of employer contributions and tax benefits. Even if you’re self-employed, starting a small retirement fund helps you build a safety net for when your body gives out on you.
What Types of Investments Can You Explore?
The good news is that you don’t have to be rich to get started. In fact, investing has become so normal and easy over the years that you could launch your investment strategies on your phone/computer.
Stocks & fractional shares
Platforms like Chipper Cash, Trading 212, among others, allow you to buy tiny pieces of big global companies, so you can get exposure to brands you know and trust, even with limited capital. You might want to buy a Google share, but can’t quite raise the full amount for it. Fractional shares allow you to buy a piece of that share, and keep buying a piece of that share until you collect enough to make a complete share…perfect for youth starting out with limited capital.
Index funds & ETFs
These track a whole group of stocks, like the S&P 500 or global markets, and help you diversify with less stress and fewer fees.
Retirement accounts (pensions/voluntary funds)
Even if you can only contribute a small amount, compound growth over decades can be life-changing.
For retirement savers of all ages, it’s worthwhile to focus on investment vehicles that give you a tax break for doing so: company retirement plans like 401(k)s, 403(b)s, and 457 plans, as well as IRAs. (Self-employed individuals have an array of different vehicles to choose from.) – An Investing Road Map for Early Career Accumulators
Crypto
High risk, high potential. Crypto investments like Bitcoin or Ethereum can be rewarding if you only invest money you’re willing to lose. They’re a great way to get exposure to global tech innovations.
Real estate
If you can pool money with friends or family, buying a rental property or land can be an amazing long-term investment.
Micro-investing apps
Apps that round up your spare change and invest it automatically can help you build wealth bit by bit.
Socially responsible investing (SRI)
If you want your money to match your values, SRI lets you invest in businesses that focus on social good, the environment, and ethical governance.
How to Get Started
Set your goals: What are you investing for? Retirement, buying land, starting a side hustle, collecting some passive income? Write it down. The more defined your goals are, the easier it will be to choose investments that match your timeline and risk tolerance. Write them down, review them regularly, and adjust as life changes.
Start small, but start now: Even UGX 10,000 can grow if you keep adding to it. Set up a monthly portion of your money for investments. The most important step is to start, because you’ll build consistency and develop the habit of investing, which is far more valuable than waiting for a “perfect” time or larger money.
Automate your contributions: Use standing orders to send a fixed amount into your investment account every month. Life is busy, and it’s too easy to forget to invest when you have bills, emergencies, or fun plans fighting for your money.
Diversify to Manage Risk: Never put all your eggs in one basket. Spreading your money across different assets, like stocks, index funds, bonds, or even a little crypto, helps you balance out the ups and downs of the market. If one asset drops in value, another might rise, protecting your overall portfolio. Diversification is your safety net against unexpected financial storms.
Keep learning: Markets change, technologies evolve, and governments update policies. By continuously learning through financial blogs, YouTube channels, books, or talking to friends who invest, you gain knowledge that helps you make better, more confident decisions and avoid panic when markets get volatile. Treat your financial education as a lifelong process.
Investing in your 20s is easily one of the smartest financial moves you can make. It gives you a head start, allows you to recover from mistakes, and helps build habits that will protect your financial future. You don’t need to be a millionaire to start; you just need to start.
If you can plant that seed today, you’ll thank yourself tomorrow, and while we are on the subject, here are 7 Smart Investments for First-Time Entrepreneurs in Uganda, How to Break in, and What to Avoid.
