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Even if you’ve just begun paying back your student loans, it’s not too early to think about investing. Entering the financial marketplace while you’re young will lead to independence throughout the coming decades. Here are five basic lessons to start you on the financially rewarding path of wise investing.
Investment choices can be overwhelming for a newbie, and you probably need an entirely different kind of portfolio than your mother, boss or more established coworker. A good adviser will help you select investment products with the right level of risk, return and liquidity for your individual needs — and will help you gain a full understanding of how the stock market works.
Does your job offer a 401(k) plan? Too many millennials ignore that part of the paperwork when they get hired, focusing only on immediate benefits like flex time and health insurance. It’s good to form the habit of saving for your retirement while you’re young, and the great thing about a 401(k) is that your employer may match your contribution. Also, your 401(k) funds aren’t subject to income tax right now, so you may be able to lower your tax bracket as well.
Apps don’t take the place of a good human adviser, but they can definitely provide you with some solid information and cool visual analytics. The Betterment app is popular with millennials, because it asks about your age and investment goals and then guides you into a diversified portfolio. With no minimum investment, it’s a great way to dip your toe in the water. Other well-reviewed apps include FinMason, Acorns and Kapitall.
Investing can be just as thrilling as extreme snowboarding or paragliding. This may be the one time in your life when you can throw some caution to the wind and try jumping into a few high-risk, high-yield investments. You have years of earning potential ahead of you, so do some homework and then take advantage of exciting opportunities.
It’s tempting to want to put your investment into the industry field that’s most familiar to you — after all, that’s where you have an insider’s view. However, building your portfolio is a good reason for doing some global research; you’ll develop a deeper connection with your world while also strengthening your financial position through diversity.
Think of investing as your next adventure: take some risks and learn the ropes, and you’ll discover a fascinating and rewarding new territory.