Markets are volatile, and everything is unpredictable, especially after COVID. But if you have done the correct financial planning, you don’t need to worry. It is a common problem that “Finances for young adults” isn’t a part of the high school or university curriculum. However, many adults lack this knowledge and living paycheck to paycheck. It’s an important task to learn money management skills. If we look at the recent events, inflation is at its peak, and the world is heading toward another recession period. So, if you want to survive this economic crisis, start investing money from an early age.
Best ways to invest your money when you are young:
Investment shouldn’t be complicated if you know the opportunities properly. But if you are new and just starting, it could be overwhelming. However, if we look at the market, there are many attractive options for entry-level investors. But a wise investor is the one who knows what is there to take and what’s right to leave. Here we give some options that young investors can use to multiply their money.
Invest in Gold:
Gold is another safe investment option, and due to its immense value, the market has reached up to 3 trillion dollars. However, if we do research, top investors consider GOLD the safest investment. But always keep in mind that the gold market may see fluctuations like stocks in a short period. But as per the experts:
“Gold holds the value over the long run.”
Apart from this, gold is safe because it’s protected from inflation over the long run. So, the investment range depends on your short and long-term needs. The gold investment isn’t beneficial if you buy it for the short term. Gold isn’t safe against inflation every year.
High yield savings account:
If you are an entry-level investor and can’t find investment options, it’s the easiest way. The federal deposit institutes and insured banks are highly liquidating and lose value with slight fluctuation. So, it’s a better option to invest the money instead of losing purchasing power. There are many banks and financial institutions that provide this facility. You get a fixed interest percentage in saving accounts, and the money adds on with time.
US treasury bonds:
If you are a young investor living in the USA, then US treasury bonds are a good investment option. It’s a safe option because the US government never gets defaults on its debts. Thus, investors trust treasury bonds a lot, and it’s considered a secure investment option. But according to the Matthews:
“Recently Treasury bonds have become less attractive due to the less yield.”
Still, these bonds perform best if you want to keep yourself safe from inflation. However, if you are interested, you can buy directly from the US treasury or the secondary market. In addition to this, you can find technology partners like online brokerage platforms to purchase treasury bonds. There are the following other options that you can consider:
- Consider investing in mutual funds
- Exchange-traded funds (ETF)
You can go for these options because these are less complicated than US treasury bonds. Besides, it’s easy to resell an ETF and mutual funds in the secondary market.
If the investment is heavy, then real estate is the safest option. It’s famous that real estate helps make money even if you are sleeping. But there are many things that you will have to consider like local conditions, location, and area where you will buy. According to the Matthews:
“Whether it’s rental or commercial property, the value will go up, keeping you safe from stock market fluctuations.”
Above all, if you buy property for the long term, the appreciation may remain low. According to the stats, on average, with 25 years of investment, the value goes up to 3.8%.
Note: You shouldn’t forget that real estate investment comes with additional costs like maintenance fees, property taxes, etc.
Go for the preferred stocks:
Preferred stock is a combination of stocks and bonds. For instance, in this investment opportunity, you get a guaranteed dividend and the stocks’ ownership. But the preferred stock works both ways, and you can see appreciation and fall in the value. Still, preferred stock is a good option because you will get income no matter what your stock is doing. Thus, the degree of income protection is a plus point, and it happens due to high dividends. Here are other options that you can consider for investing money at a young age:
|Corporate bonds||Saving bonds|
|Certificates of deposit||Retirement saving plans|
But there is no such thing as a risk-free investment. However, all the above options come with risks and losses. Besides, the investments may lose value when inflation rises. So, you will have to act wisely and choose a diversified portfolio to grow more money over time.
Tips to consider while investing money at a young age:
If you want to multiply your money, then the rule is simple. Yes, you only need to increase your income and spend less. Besides, before investing, don’t forget to pay attention to these pointers:
You also have an option to go for active or passive investment opportunities, and it entirely depends on the above factors. Apart from this, here are other tips that will help you buckle up for the investment at a young age.
- Set up an emergency fund because it provides a foundation for your investment plan (Try to keep 3-6 months of expenses as an emergency fund)
- Try to adopt innovative ways to make more money.
- Never stop taking baby steps to enhance your savings because it leads to investment.
- Don’t go for the investment without estimating the potential cost
- Draft a Plan and stick to it
- Keep track of your income (You can use software like a paystub generator for recording inflow and outflow of money)
If you think that things are overwhelming and beyond understanding, don’t hesitate to ask for the expert’s help. But at first, try to pay off your debts, especially those with a high-interest rate. Investing money looks appealing, especially if you haven’t done it before. But it’s equally important to take wise and calculated risks.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of Citizens Journal