Investing While Young

If you’re in your twenty-somethings, you’ve probably heard someone say, “You don’t have anything tying you down. You’re so free right now!” It’s probably an odd thing to hear, especially if you don’t feel as free as they perceive you to be. But in a lot of ways, they are right. This decade of our lives can be an era of carefree wonder and a perfect time to invest in ourselves personally, professionally, and financially. 

With all this opportunity it’s important to take advantage of this time, so here are a few ways to invest while you’re young.  

1. The Wonderful Gift of Compound Interest

“Compound interest is the most powerful force in the universe ,” – Financial planner Jude Wilson of Wilson Group Financial. 

If you can, starting in your early twenties can really prove helpful in 40 years. For example, if you invest just $150 a month for 40 years, with an 8% interest rate, compounded annually, you’ll come out with $466,301.73 by 65. And that’s before you find a job that offers 401k contributions. Make sure to take advantage of any type of employer assistance if it is offered. Having both accounts running at the same time can be extremely useful come your time to retire. 

A lot of us, including myself, don’t think it was worth garnishing the little bit we already make. We all have our reasons: Student loans, high rent in our community, covid-19 issues. These are all legitimate reasons to avoiding the start of your retirement account. But even the smallest contributions can give you huge returns if you keep up with them. 

It can be easier to invest the money if you don’t even see it in the first place. This is where using an automated savings account can come in handy. Setting automated savings can help you create a budget that makes it a lot easier to live on less. 

2. Invest in Yourself

If this past year thought us anything, we are in control of one thing: our own personal growth. Using the freedom, time, and opportunity we have now on investing in our own personal growth. Attend webinars and zoom presentations, learn from a career coach on Tiktok, perfect your LinkedIn account, read a book on a topic you really care about. The more you invest in you, the better you’ll be and the more you’ll be able to invest in others. It takes intentionality though, so don’t wait to start. 

3. Prioritize Student Loans! 

There is a current freeze on federal student loans until September 2021. No payments are due, and no interest will accrue. As the economy kicks back up from recovering from Covid-19, more jobs will enter the market. Use this time to find a career and job that you really care for that allows you to achieved your financial goals. In addition, make sure to follow what seems like the never-ending student loan debt conversation on whether congress will forgive a certain amount of loans or not. 

4. Don’t Keep up With the Kardashians. 

With the ‘perfect lives’ that we see daily on social medias, don’t get caught up in chasing after a perfection standard that quite literally does not exist. What we see every day is not what reality is. This doesn’t go to say not have fun. By all means go on that trip into town, eat out once in a while, save for a mini vacay, but try not to fall into the trap of keeping up with a standard of life that only exists online. 

Investing in yourself is the best thing you can do for your future, so take some steps today!  

Tips for investing and starting on retirement: 

Already mentioned: The Top Automated Savings Apps

Where to start a 401K or Roth IRA account: The Best Online Brokerage Accounts For Beginners To Experienced Investors

Contributor: Tomás Carradero