Investing in your 20s is overrated

December 25, 2025

Saving during your 20s is overrated...

...if you are ambitious and in the game of startups. Compounding is really overrated. Are you a regular joe that is looking for a stable risk free life? Well in that case, congrats; saving early is extremely powerful.

The problem is that in the game of startups one of the best assets young founders have is having nothing to lose. There are so many success stories in SF of people that were broke until they exited their company, took a secondary or reached the point where they could comfortably pay themselves a large salary. Slaving away for a salary of 100k with the hope that it turns into 200k 10 years later is a joke when you are 10 failures away from actually catching up to the golden goose. But only if you don't give up and continue playing the game.

The experience you can accumulate from failing 3 years in SF is insane. That will be more valuable than any type of compounding your "decent" salary can generate in that period.

Don't get me wrong, compounding and time are the most valuable assets in investing, but investing is far from the most valuable thing to do as a motivated 20 year old. Investing is what you do when you have made your first dollars, it is not a good tool to build wealth from nothing. Everybody tries to tell you to be patient, patience comes later in life. Trying and failing will teach you more than compounding ever will.

Most people do not believe it, but the universe really tends to reward the people that stick around. Everybody wants to scare you with horror stories about how hard it is to succeed in the game of startups, bringing up the 9/10 failure rate argument. The truth is that it is rare to not succeed if you just zoom out a couple of years.

A person I look up to told the story of him and his circle of founders being clueless during the 2012 era in SF. Just trying and failing over and over again. What he said is that looking back he doesn't think a single idea from that time ended up being the winning one, but 10 years later they have all won and not a single person in that room is worth less than 10 million dollars. If you stay in the game it is just really hard to lose. Worst case scenario you are an attractive hire for a large corporation under engineering, growth or whatever.

People are looking up to Warren Buffett and Dave Ramsey. Is that lifestyle really what is interesting to people? Having more money than you can ever spend but being old and having trouble getting out of bed in the morning? For me it is trying and failing over and over again chasing the dream of having the money and resources to travel and do whatever I want in my late 20s and early 30s.

If I spend 10 years failing, lose my "libido" for the game, and end up moving back to Sweden at least I will be the most interesting ordinary person at the gathering. That alone is something itself.

The compounding effect of knowledge will always outrun the compounding of money in your early years.