Five Tips for Making Wise Investments in Your 20s

Tuesday, July 14, 2020, 6:00 AM | Leave Comment

When you’re in your twenties, it can be hard to think about long-term goals.

The future seems so far away until you wake up one day, in your 40s, wondering where the time went.

This is why time is of the essence. When it pertains to your long-term financial goals, you’ll need to develop a plan for investments.

Consider the five tips for making wise investments in your twenties.

Five Tips for Making Wise Investments in Your 20s

  1. Know Your End Goal

    If you know your end goal, it’s a lot easier to create a strategy to get there. Your end goal might be to retire at 45 years old with $4 million in your account. That’s a clear end goal with a defined time frame and specified dollar amount. If you’re just grasping for straws regarding investments you might try when you feel like it, it’s going to be difficult to achieve success.

    Whether you choose to develop a real estate portfolio or heavily invest in stocks, get clear about how much you’ll need to scale. Consider how long it’ll take to achieve the numbers you’re looking for from a realistic perspective. Sure, there will be bumps along the road. Other opportunities might pop up. You might decide that you’d like to diversify or try another investment strategy. However, when you have a numerical goal and a clear timeframe, it’s much easier to remain focused.

  2. Do Extensive Research

    Research is paramount. You don’t want to enter an investment strategy without knowledge. That’s a perfect way to lose money. Granted, your educational process doesn’t need to be expensive. There are so many financial professionals who teach investment strategies through platforms such as YouTube and Google. You can learn a ton about the foreign exchange market by listening to podcasts, reading books, and practice sessions. Take online courses, read books, and pay attention to the news surrounding your strategies.

    Keep in mind that when you’re in your twenties, you might be tempted to make the mistake that so many make: procrastinate. Under the guise of research, many people procrastinate by researching extensively before taking one step. Take your educational process seriously, but don’t become paralyzed by feeling as though you need to learn everything about real estate before you begin brokering your first deal. Instead, learn as you go.

  3. Find Financial Mentors and Advisors

    You’ll want to invest time and effort into getting around the right people. If you don’t have mentors and advisors in your life, be aggressive in accomplishing this effort. The people around you will naturally impact the person you become. If you want to be wealthy, you’ll need to get around people who have made the right decisions that led them to wealth. You can hire a financial advisor to keep track of your financial moves and give you guidance. Before you hire your advisor, pay attention to the track record they have.

    This same sentiment applies to the mentors you have. If they talk a lot about investing, but they’re not actually showing proof of their hard work, it’s time to move on to another mentor. While it’s really helpful to develop relationships with financial mentors you can actually sit down to talk with, embrace the beauty of developing financial mentors from afar. For many people, Bill Gates is a mentor in their heads. They listen to his interviews, pay attention to his moves, and aspire to be like him.

  4. Diversify Your Bank Accounts

    While it’s nice to bank with a national branch for convenience and low banking fees, it’s not always the best choice for mortgage loans, retirement accounts, and more. You can keep your bank account, but diversify your options. Consider finding a credit union in your area. For example, if you live in Nebraska you might search for the best credit union in Omaha. Credit unions are really helpful when you’re looking for the best rates for loans and saving purposes. Depending on the credit union you choose, you can easily transfer funds, participate in mobile banking and so much more.

  5. Develop a Fully-Stocked Emergency Fund

    Your investment fund and your emergency fund are two separate entities. Never mix or confuse the two. To be clear, an emergency fund is for emergencies (unexpected circumstances) that impact your ability to provide for yourself and your household. If you lose your job, get sick or experience a loss that requires a quick flight to the funeral, you can pull money from your emergency fund. Do your best to set aside a year’s worth of living expenses in that fund.

Because time flies, you’ll want to use it wisely. This is also applicable to your investment strategy when you’re in your twenties. When you’re dealing with money, investing early is best because of the power of compound interest. Be consistent with your efforts, and you’ll reap the benefits in the long run.

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