Seven investing tips experts wish they knew at 21
While young people are in a great position to invest, their lack of knowledge or money often prevents them from making the most of their opportunities.
Vincent Anthonyrajah, CEO and co-founder of Differential Capital, and Garth Mackenzie, Founder and Editor of TradersCorner.co.za, gave the investing lessons they wish they knew at 21 on The Money Show with Stephen Grootes.
Although many people find their feet as investors over time as they gain more experience and learn from their past mistakes, there are things young people can do to get ahead more easily.
Younger people have time on their side, which is a very big bonus from an investing perspective.
They can make riskier, more aggressive moves, learn from their mistakes and develop their strategy over time.
Most importantly, they can reap the benefits of compound interest, which many experts call one of the most powerful forces in the world.
Albert Einstein has been quoted as saying, “Compound interest is the eighth wonder of the world. He who understands it earns it. He who doesn’t pays it.”
The world’s most famous investor, Warren Buffett, also said that time, and not money, is the most valuable asset in investing.
“My life has been a product of compound interest,” Buffett told Rubenstein during an interview with The David Rubenstein Show.
It is interesting to note that 99% of Buffett’s fortune was generated after he turned 50. He did not become a billionaire until he was 56.
Below is Anthonyrajah and Mackenzie’s advice for young investors.
Start early
Mackenzie explained that many young people do not realise they have an invaluable asset on their hands when it comes to investing: time.
Time allows investments to compound, which Albert Einstein famously called the “eighth wonder of the world.”
The more time you have in the market, the more time your investments have to accumulate compound interest, which is “a very, very powerful thing”.
“It really is phenomenally powerful if you can harness it from a young age and use it to your advantage.”
Unfortunately, many young people do not have the capital to invest, or if they do – they prefer to spend it on flashy items like cars, clothing or jewellery.
Mackenzie explained that putting that money towards investments instead will put you in a much better position later in life.
Build a buffer
According to Anthonyrajah, building a financial buffer early in your career is crucial. You will probably be surprised how many times you need a substantial buffer because of a problem.
While this isn’t something young, carefree people think about. At any given point, you could be two months away from a major financial crisis or a global pandemic.
“There’s always a crisis around the corner.”
Seek out information
Mackenzie explained that young people have the advantage of having a lot of easily accessible information on investing, such as podcasts, YouTube, and audiobooks.
“There’s all sorts of information available very easily and for free – for those that want to go and take it.”
However, while the internet has made information easier to find, it hasn’t necessarily made people more savvy investors.
Social media encourages people, especially younger people, to compare themselves to others, which often leads to people spending their money on “flashier items” and being even more financially irresponsible.
Remain optimistic
Anthonyrajah explained that while older investors tend to be more cynical and careful due to their investment “scars”—which can be a useful tool—younger people usually have a lot more enthusiasm, ideas, and innovation.
“It’s those cars that prevent you from making silly mistakes, but you need that continuous idea generation, that optimism – which I find younger people often have – because it’s still important to be optimistic about markets.”
“Older traders sometimes get a little bit jaded about everything, which probably makes you a worse-off investor, because investing is about taking risks.”
This can also be seen in the investment instruments older and younger investors choose.
Younger investors are more aggressive and are more likely to put their money into newer, untested instruments.
For example, while older investors have been weary of cryptocurrencies, younger investors have rallied behind them.
“It’s been a very strong asset class up until now for a large part,” Mackenzie said. “Certainly for the bigger cryptos like Bitcoin and Ethereum and Solana.”
Have an investment strategy
According to Anthonyrajah, a key investing lesson is that unless you’re willing to put in the effort to develop a clear investment philosophy and strategy – understanding why it works and sticking to it – you will be wasting your time.
Many seasoned investors recognise they don’t have the time or resources to consistently outsmart the market.
Because of this, they make more realistic decisions assess their skills more accurately, and adjust their strategies accordingly.
Younger investors, driven by enthusiasm and a thirst for knowledge, often experiment with different companies and investment types.
While this eagerness is valuable for learning, it can also lead to significant losses if risks aren’t managed carefully.
Anthonyrajah encouraged young investors to learn, explore, and make mistakes, but do so wisely.
Allocate only a small, manageable portion of your portfolio to high-risk ventures so that setbacks won’t derail your financial future. Balancing curiosity with caution is key to long-term success.
“It’s about proportioning out the investment so that you don’t blow yourself up.”
Learn from others
Mackenzie said the fastest route to wisdom is to learn from those who’ve already walked the path you’re about to embark on.
For this reason, younger investors should try to find more experienced investors who can mentor them on how to think about and approach investing and how to see the bigger picture.
“It’s very, very helpful if you can do that, and I’d certainly encourage it,” Mackenzie said.
“I think leaning on older people, people who are experienced, and standing on the shoulders of giants is probably one of the quickest ways to get ahead as opposed to having to learn your own mistakes.”
Watch the 200-day moving average
Mackenzie said the 200-day moving average (MA) is a simple but powerful tool for identifying long-term stock trends.
It calculates the average closing price of a stock over the past 200 trading days, smoothing out daily price fluctuations to show a clearer trend. Each day, the average updates by adding the latest price and removing the oldest.
If a stock trades above its 200-day MA and the line is trending upward, it suggests strong buyer interest, with the price steadily increasing—a positive signal for long-term investments.
Conversely, if the stock is below its 200-day MA and the line slopes downward, it indicates sellers dominate, often signalling a bearish trend or declining industry performance.
While bargains can sometimes be found below the 200-day MA, stocks that lose significant value often start by falling below this average.
Monitoring this indicator can help investors stay aligned with positive momentum and avoid underperforming assets.
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