5 Top Investment Ideas You Should Start In Your 20s
Your twenties are the time when the realization about the significance of saving starts sinking in. This age is also where you gain financial freedom and gradually start taking responsibility for your savings and expenditures. Your twenties are also the perfect time to start your journey as an investor because you still have a long road to amass enough wealth for the later life stages.
But you might be pretty confused about the right investment path if this is the first time you’re trying to invest. So, here are some ideas that will help you in making the right investment decision.
1. Invest in Mutual Funds When You’re Young
Young investors need to focus their investments on growth-oriented asset classes. You still have decades ahead of you. So, you have the advantage of compounding higher returns on growth investments than the safe, interest-bearing ones.
One of the best things about mutual funds is that they are easy to understand and simple to research and buy. Thus, if you are a first-time investor, you will find it easier to handle the investments you make in mutual funds. Besides, mutual funds hold many securities like bonds and stocks, so they let you diversify your money.
EarnForex.com also advises young and first-time investors to go for mutual funds because it needs no skill to purchase mutual funds, and they come at a reasonably low-cost price. Additionally, mutual funds come with tax benefits, so that is a significant advantage.
2. Go for Fractional Shares of Stocks or ETFs
You do not need to buy full shares of stocks or ETFs nowadays. If you prefer being hands-on with the investment but cannot afford to have a lot of stock, go for fractional shares. You will purchase a part of the stock for a fractional price.
Suppose you plan to buy XYZ Company’s shares, but shelling out $500 for one share is out of your reach. So, you can invest about $20 and purchase a part of that share. You will still be the owner of a part of the company, but you will not need to spend all your money buying one share. However, keep in mind that not every broker or platform lets you purchase fractional shares. Thus, you will have to look for someone who does.
3. Increase Your Investments as You age
When you are in your twenties, there are too many goals that you want to save for. You might want to buy a new car, a house, or travel more. While you should keep these goals in mind, you also need to save for your future.
Therefore, the best thing you can do is start saving gradually and increasing it as you age. It will help you save for retirement while also keeping other goals in sight. A good plan is to start saving one percent of your income when you begin and increase that percentage gradually by one percent as per the increase in your income.
So, by the time you reach your thirties, you will be able to save about ten percent of your income.
4. Start Paying Off Your Debts in Your Twenties
One of the significant complications you might face in making sound investments is your debt. A student loan is the most common issue, though other issues like car loans and credit card debts are also a problem for many. The biggest debt issue is that it gets your cash flow reduced. If you earn $6,000/month and spend $900 on debts, you will only have $5,100 left with you.
In a perfect world, you would not even need to have debts at a young age. But, this is not the right world, and you have debts already. So, if you want your debts to not come in the way of your investments, you will have to create a balance that lets you save enough money for daily expenditure.
5. Do Not Give In To the Fear of Missing Out
You are trying to invest for your benefit, secure your future, and not compete with anyone. There is no need to keep up with anyone or get swayed by those fancy endorsements on social media. Everyone has different financial goals, and thus, different investment journeys.
The fear of missing out tends to make many young individuals try to increase their rate of investments. They end up spending more currency than they have, rack up debts, and put sound investment plans in the backburner. You need to tune out such distractions at a young age and tune into good financial advice to drive yourself to find money that you can invest in your future.
You need to choose about two to three investment avenues and move forward with them. Investing will work the best in your favor when you start early in life. It will help your money grow and give you a plethora of options for the future.