Investing in Your 20s

It’s no secret that investing early on is one of the smartest things you can do for your future. The earlier you start, the more time your money has to grow. But if you’re in your 20s and just starting out, the whole process can feel intimidating. Where do you even begin? Don’t worry, we’re here to help. We’ll give you a crash course in investing in your 20’s and share some tips on how to get started. By the time you’re finished reading, you’ll have a better idea of where to start and what to do next. So, let’s dive in!

The Basics of Investing

Investing simply means putting your money into something with the expectation of earning a return on your investment. That return can come in the form of interest payments, dividends, or capital appreciation (the increase in value of an asset). There are many different types of investments, but some of the most common are stocks, bonds, and mutual funds.

Stocks represent ownership in a public company and entitle the shareholder to a portion of the company’s profits (dividends) as well as any future growth in the value of the stock (capital appreciation). Bonds are loans that are made to entities such as corporations or governments. The bondholder agrees to lend the entity a sum of money for a predetermined period of time at a fixed interest rate. Mutual funds are pools of money that are managed by professionals and invested in a variety of assets, including stocks and bonds.

Now that you have a basic understanding of what investing is and some of the most common types of investments, let’s take a look at some tips on how to get started.

Tips for Getting Started Investing in your 20’s:

1. Figure out what your goals are:

Do you want to retire early? Save for a down payment on a house? Pay cash for a wedding? Send your kids to college? Once you know what your goals are, you can start thinking about how much money you’ll need to invest each month or year to reach them.

2. Start small:

You don’t need a ton of money to get started investing. There are plenty of apps and platforms out there that allow you to start investing with as little as $5-$10 per month.

3. Educate yourself:

Learning about personal finance and investments doesn’t have to be boring! Check out podcasts like “Planet Money” or “Freakonomics Radio,” read books like “The Millionaire Fastlane” or “The Intelligent Investor,” or even take an online class through sites like Coursera or Udemy.

4. Automate your investments:

Once you’ve figured out how much you want to invest each month, set up automatic transfers from your bank account so that you don’t have to think about it every month. This way, investing becomes less like a chore and more like Habit-forming behavior! And speaking of habit-forming behavior…

5. Make it a habit:

The sooner you start investing, the better off you’ll be in the long run. So, make it a habit! Decide on an amount that you’re comfortable investing each month, and then make it automatic so that it becomes second nature after a while.

Starting to invest in your 20’s can feel daunting, but it doesn’t have to be! By taking some time to educate yourself and figure out what your goals are, you can start small and make investing a part of your regular routine. And remember: the sooner you start, the better off you’ll be in the long run!