Investing Your Money- Is Starting at Age 20 Too Early?

What’s on the mind of the average twenty something? School, work, dating…investing?  Probably not.  But depending on your current financial situation, it should be.  Although it may seem overwhelming to think about, there are numerous resources available to you to help you get started with investing if the time is right.  Here are some basic things to know:
What is investing?
Investing is taking some of the money you have from your income or in savings and putting it to work in the hope that it earns more money.  The most common ways people invest are by putting money into assets such as stocks, bonds, mutual funds, and real estate.  This is different than saving, where money is simply put aside in an account and is not to be spent.  Although it is important to have a savings account for easy access to cash, saving is not enough to achieve long-term goals, such as retirement.
Are you ready to invest?
As a twenty something, you may still be in school and have limited income, or are just starting out on your own and spend most of your income on bills  However, there are several signs you might be ready to begin investing:
  • You live within your means
  • You are able to save regularly
  • You use credit wisely
  • You carry adequate insurance
If you find yourself in most of these categories, it may be time to consider investing.  The next step is then to decide why you want to invest.  Here are four reasons to invest, and many people invest to achieve all four:
  • To achieve financial goals (vacation, purchasing a home or car, etc.)
  • To gain wealth and financial security
  • To increase current income
  • To meet retirement income needs
Unfortunately, investing is not completely free of risk-meaning you aren’t guaranteed to make money off of every investment.  In the next post, I will discuss different types of securities, risk and diversification, and where you need to go once you’re ready to invest.
The most important takeaway is to realize that investing takes discipline.  You’re going to have to trade off between spending money now in order to grow your wealth over the long term.  We guarantee though, the sooner you get started, the more your future self will thank you.
Post written by Amanda Owens, SMMC Program Assistant
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