August 18, 2016
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In early adulthood, there’s a lot going on. College, careers, maybe even marriage and children. Many people struggle with debt and unemployment. But maybe you’re not like them. Perhaps you’ve paid off all your debts and have a good-paying job. You might even a solid savings account that includes enough money to last you for six months. You’ve got it all, so what’s next? Investments.
The right investments can help you grow your money. It won’t happen overnight, but if you start in your 20s, you may have amassed a six-figure fortune by the time your each your 60s. But there is no age limitation when it comes to investing. There’s never a bad time to start, so even if you’re in your 30s or beyond, you can benefit from a few investments.
Investing may seem complicated and overwhelming. Stocks, bonds, index funds, IRAs – where do you start? Here’s a guide to help you simplify the process and get your foot in the door, even if your investment knowledge is quite limited.
- Become financially stable first. If you have thousands of dollars in debt, are unemployed and can’t even afford groceries, then it might not be a good time to start investing. You won’t make a lot of money in investing at first, so use your money toward paying debts and building a savings account. Start investing only when you have extra money to spare.
See also: 15 Signs That Prove You're Financially Stable
Source: Science Daily
- Start sooner rather than later. While you should make sure you’ve got your finances in order, you should ideally start investing as soon as possible. The longer you wait, the more money you’ll miss out on. So get a budget going and start contributing a little investment money from each paycheck.
Source: Keyword Suggestions
- Invest in what you know. Stocks are a good way to foray into investing. Almost everyone is familiar with them and how they work. Start by investing in companies you know and love. If you love cars, invest in a popular manufacturer like Ford or Chevrolet. Can’t live without your tall Frappuccino? Invest in Starbucks. Fast food lover? Buy some stock in McDonald’s or Burger King. This is a good short-term strategy, but you’ll want to begin some more serious investing once you determine your long-term goals.
See also: 10 of the Smartest Things to Do With an Extra $1,000
Source: Beginner's Invest - About.com
- Diversify. If you enjoy investing in stocks, turn it up a notch and go all-in. Don’t put all your money in one or two stocks. Invest in multiple stocks or try mutual funds, which are composed of stocks, bonds and money market assets. A common type of mutual fund is an index fund, which is created to match a market index. Index funds offer a broad exposure to the market and offer low fees. An exchange-traded fund is a type of index fund. They can be traded throughout the day and the fees are low.
Source: Quandr Canada
- Try a target-date fund. You might already have a target-date fund in your portfolio if your employer offers a 401(k) or IRA. These funds stay in your account until a specific date (in this case, your retirement) and there’s nothing you need to do. Fund managers do all the dirty work of crating the perfect combination of stock, bonds and other assets based on your target date. Some funds have better quality assets than others, though, so you’ll need to do some research and choose the right one.
See also: 5-Minute Money Moves That Will Improve Your Finances Today
Source: Main Street
- Do it yourself. Don’t want to pay any broker fees? Open your own account and do all the trading and investing yourself. This may not be the right choice if you know absolutely nothing about investing, but if you have a solid background, this can be a good way to see what works and what doesn’t. This could also be a fun project if you’re a risk taker. You can always do some research on the stock market to see what’s hot and what’s not. You don’t have to do it forever. Just try it for a few months or so and see what you can gain on your own.
Source: GLI Finance Limited
- Get advice. Talk to an advisor or other professional who can steer you in the right direction. With your budget and goals in mind, an advisor can tell you which types of investments to try and which ones to avoid. You’ll understand the pros and cons of all the options and be better prepared to make the right decisions.
Source: Seattle Public Bank Coalition
Don’t think you’re too old. It’s never too late to start investing. Even if you’re in your 50s and just now ready to start, you still have an opportunity to earn a decent amount of money over the next few decades. With a little knowledge and discipline, you’ll be living comfortably in retirement.