This year I am 40 years old guy and just now I thinking about good investment ideas for young adults. I am not young anymore but from this point of you I can tell interesting things about this topic.
What are good investments for young adults ? The best investment is good education where you can develop practical skills in area of interest such as stocks trading or digital marketing or eCommerce business or any modern skills (formal on informal education) than to invest time to learn how to achieve passive income and to learn how to invest in indices (mutual funds, stocks – instruments that can bring you compounding income).
So let we start …
After your graduation from school, you get a full-time job and become roommates with friends or colleagues away from your family. Though technically, you’ve always been an adult from when you turned 18, you still don’t really see yourself as someone in their adulthood because you feel like it’s only when you start investing your money that adult life begins. Well, that’s the feeling young adults have about life and makes sense.
Sadly, the truth remains that a majority of young adults want to start investing their money so that they can begin their retirement saving which they value so much. The problem is, they actually are clueless about where to begin. Whether you just graduated, got your diploma, and began working, or you’re set for an Individual Retirement Account (IRA ) or a 401(k) account, you can benefit from the crash course on investment ideas for young professionals which we’ve created to assist young investors maximize the money they make.
Benefiting from investing early
Almost all financial experts say that being able to invest and save money early in life is among the top important steps young people need to secure a successful future. Investing early comes with the following benefits:
The power in compounding interest
Compounding interest refers to a fancy fashion of talking about the interest you earn on that interest you accrued previously. It’s a potent force in the course of building wealth.
Take, for instance, that a 25-year-old adult invested $5000 every year and quit investing at age 35. Let’s assume he was getting an interest rate of up to 7%. This would amount to a gigantic $602,070 at retirement with no dime being saved after 35 years of age.
Now, make a comparison with a person that is not saving until 35 years of age. Instead, they save $5000 annually between 35 and 65. This older adult will end up investing $150,000, which is about three times how much the young adult invested. At 65, this older adult would have made $540,741 before retirement. The best time to invest is to start early because that is the ideal time to maximize the principles that come with compounding interest.
A good way to combat inflation
In 1958, a home could sell at an average price of about $10,450, a gallon of gasoline at $ 0.52 and a new car at as little as between $1967 and $3929.
When it comes to the value of money, the more time passes, inflation sets in. In order to outpace inflation, invest as a young adult, and that will help you accumulate significant interest.
A less than scary retirement plan
In the 1950s, employers had a common practice of taking care of each of their workers after their retirement by offering them a pension plan which the company crafted in exchange for the years they served the company. A generous pension program, indeed.
When people began to live longer with wages failing to withstand inflation, the companies pulled out their responsibility of taking care of that generous pension plan for employees. Now employees had to deal with their retirement funds by themselves via contributions to IRA (Individual Retirement Account) or a 401(K)
Currently, baby boomers are facing a severe problem. A lot of them lack adequate money for retirement life, and this forces them to work beyond 66, which is retirement age. Young adults that start saving now automatically prevent this issue by having their money grow with time.
For me passive income is solution and not dreams about generous pension program !
The best ways young adults should invest are:
1. Eliminating debt
For me, debt is good if you take money to invest in something. Education can be investment but every smart person need to understand that education is not just future money source. Formal education is science, theory and not always future source of money. Sometimes can be passion and love (social science for example, wish to help people, not to earn money).
As a millennial, you’ve probably got yourself into some debt. A survey conducted by Young Adults Money shows that 43% of today’s young people have a student loan debt in some form. 83% of them say these debts put so much pressure on them, curtailing their capacity to focus on their other goals financially.
Provided you do not owe any student debt, another similar troubling financial issue maybe a credit card debt that you’ll have to get out of. 7 and 10 young adults constantly live with in a balance their credit card has incurred. Also, 50% of both women and men believe that their debt is too much.
Is there any debt you should pay off? A “snowball method “is a great way to reduce your debt slowly over time with no worry about having to miss the minimum payment. You just need to identify the smallest of your debt and program each of your funds in your debt reduction plan. You can do this why paying your minimum balance required for every outstanding account you have.
2. Index funds
Stock market investment is among the best ways most people invest a significant amount of their money. However, only few understand the way stocks are valued and their worth in terms of purchases as well as effective portfolio diversification for the sake of not having their money lost.
Index funds are an opportunity for beginner investors to build that potentially great portfolio you wish to have using expert assistance. Good enough, the fees they come with is frequently lower in comparison to all other mutual funds since their management is not in the hands of a crew of investors working with financial advisors.
3. Higher education
Today’s young adults make the highest number of America’s educated generation in history, with over 40% of 25 years old women and men holding a bachelor degree at least. It’s a huge step from the 4.6% recorded in 1940. Going to college comes with difficulties that include expensives for young people. Reasons why a university degree is worth investing in are:
•A career which requires a university degree. Some professions, like the legal or medical field, require or prefer nothing less than a degree.
•Move up a corporate ladder. Making it into most corporations can be easy but getting a promotion to a significant post requires a college degree. Some companies have a further education reimbursement program. So, ask for yours from your employer if your dream to get a degree comes true.
•The difficulty in finding the right job in the field of your training: The best solution against being unable to find work that can fully pay your bills is to get work in your field. With an advanced college degree, you can get a well-paying job.
4. Money market funds
A money market account can help you to save online. However, some of them aren’t FDIC-insured. It’s beneficial for the sake of good interest rates which can make you end better than if it’s a saving account. But, your investment is put at a pretty high-risk level.
Just make sure you work with reliable fund providers in the money market to assist you with securing your investment.
A lot of young people that are renting think of buying their own home sooner. Besides, there’s a comparison between rent price and monthly mortgage which begs the question; why not just own the house? Unfortunately, the comparison cannot limit around the price of a monthly mortgage.
For instance, living in an apartment comes with being able to ask the landlord to handle significantly expensive property issues. If the property is yours, you can only call a repair or replacement company to do their job. It is always good to learn enough about home ownership to understand if it is something you’re financially fit to handle.
The most ideal investment decision which you shouldn’t miss taking in your early adult life is to make saving your personal commitment as well as learning to check your lifestyle as per your spending.
So let we make some good directions :
1) Try to eliminate debt ( debt for studying too). If you take student loan, try to work as freelancer try to pay off debt before graduation.
2) Try in college to think about passive income. Make website, start to trade, start eCommerce business or try to sell online courses, or work as affiliate. Maybe your part time job will become your future full time job.
3) If you want to become “corporate business worker” and you dream to work in strong system in big company than try to build reputation during college days. Write articles about your expertise, work part time jobs in big companies, try to get experience before you finish studies.
4) Every 12-18 years real estate market hit bottom and than it is good time to buy your first real estate. Think about that and be patient. Of course, life can not wait decades for good real estate moment but always think to avoid to buy real estate with high loan in the moment of price peak.
Wish you good luck !!!