The years in college and following graduation aren’t always known for savvy financial moves and heeding investing tips. Living with parents and inconsistent income, maybe. Student loan debt, yes. It is hard to overstate how valuable your 20’s are, but on the long, long road to retirement, saving throughout that decade is kind of like putting an extra engine on your car. Starting at age 23, you need to put away just $14 per day to reach 1 million by age 67. Wait just seven years, until age 30 and you have to increase that amount by 50%. Hold off until age 35 and you’ll have to save more than twice as much as at 23. The investing tips/lessons here? Invest early.
Here are investing tips to help you start growing your money in your 20s.
- Learn to invest
Figure out how investing is done. Look to those that are doing it well like the Warren Buffets of the world. Read books on investing, listen to podcasts, speak with a professional financial advisor.
- Get control of your debt
The same way sound investments grow exponentially your debt will also grow exponentially. Pay off student loans or other outstanding debt. Before wading into the stock market eliminate that debt.
- Accept your employers generosity or get into some sort of retirement account
Some employers give you money just for saving for retirement through 401K plans. These tax-advantaged retirement accounts are taken from your paycheck pretax. Employers that offer this benefit often also match contributions up to a certain percentage of your salary. If your company offers a match, think about contributing enough to get the maximum, or work your way up to that. Think about a Roth IRA, you pay taxes on the money going in but then you never pay taxes on the growth of that cash. Get your money into a place where you can pick and choose your investments. Roth is preferable for those in their 20s because you are required to pay taxes on it first and those in their 20s tend to be in a lower income tax bracket than someone in their 50s for example. Unlike 401Ks you don’t need an employer to start your retirement account.
- Create a budget and set savings goals
Pay yourself first! Those dollars you are putting away in your 20’s turns into millions of dollars later on. This happens with creating a budget and set savings goals. Specific savings goals are important because it is easier to stick with it when you know what you are doing it for.
- Set specific investment goals
What are your goals, how much do you want in 20, 30, 40 years?
Start with the #1 tip: Learning To Invest, by tuning in to our investing series this fall! Each month we will have guest speakers over zoom during the lunch hour on investing. This month join us to learn about smart investing decision in the digital age, directly from leaders with the U.S. Securities Exchange Commission (SEC). Click here to register for this September 14th, 12noon virtual presentation!