If you’re just beginning your career and aren’t yet making much money, the very idea of investing can be terrifying. You may not even know what to invest in. You probably aren’t thinking about retirement quite yet, and the prospect of losing your hard earned money to shaky investments is frightening.
Delaying investing is likely a mistake—there’s a lot going for you in your youth, including a longer time period in which to accrue interest.
When you’re a beginning investor, try to think more about the amount you’re saving than the return on your investment. Because your overall wealth isn’t yet high, market swings can minimally impact your investments. While Jason Hartman discourages investing in the stock market, if you’re going to do it, youth is the best time—your monthly savings contribution will be more than market swings and you’ll probably feel better. A portfolio takes years to build, and it will be awhile before market swings will outpace what you’re putting into savings.
When you’re young, it’s great to invest through the good times and the bad. Economic downturns can be great times to (sparingly, and with great caution and the understanding that the stock market is little more than gambling) practice investing by playing the stock market. It can also be the perfect time to pick up some inexpensive real estate in areas with low land costs and laws that favor landlords. But always invest in areas that make sense—if something is dirt cheap, you’ll probably make an amount of money that reflects its original price.
If investing is new to you, begin with simple investments. There’s a great variety of retirement plans to choose from, and you can seek the help of an investment advisor or do your own research online. Find a plan that works for you. Index funds can be a good fit because asset allocation accounts for risk tolerance, something many find comforting. Index funds are also diversified and typically have lower fees. Later, you can diversify to expand your portfolio.
Alternately, you could invest in real estate and begin building wealth that will ultimately increase your savings. If you’re able to hire a property manager, your responsibilities will be minimal.
No matter the decision you choose to go, early investments will pay off when you’re approaching retirement. Instead of stressing about money, you’ll transition into your various life stages with ease and, ultimately, wealth. Take advantage of youth and invest today!
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The Young Wealth Team