A Beginner’s Guide to Investing in Your 20s

As a young adult, your 20s are pivotal because this decade will have a great impact on your coming years. You will make plenty of important decisions in your 20s, many of which have to do with money.
Earning financial security is the best way you can prepare for the future. And there are many ways to go about this endeavour. One is investing.

Emergency Fund

There are certain crises in life that you might not be able to avoid. A few examples are unexpected illnesses, theft, job loss, or natural disasters. In the event that these emergencies arise, it is always good to be prepared.

You can do so by setting aside an emergency fund. This will allow you to focus on other things without having to worry about finances. Now, how much should you save up?

If you follow the 50-30-20 budgeting rule, allot at least 5% of the 20% to your emergency fund every month. You can easily increase as you push further into your career.

Real Estate Investment

Any guide to real estate investing will tell you that you do not need to purchase a property to invest in real estate. Real estate investment trusts (REITs), mutual funds, and exchange traded funds (ETFs) are some viable options you can look into.

REITs are companies whose operations allow investors to purchase shares of the properties that they own. Every REIT leases their properties. The rent that they collect is then divided among the shareholders of the company. REIT investors usually earn back the same amount that they have invested in the company.

Debt Payment

Debts are one of the things that can impede your financial security. In fact, they may just be the most detrimental since unpaid debts will haunt you into old age. During your 20s, the kinds of debt that you are likely to encounter are student and credit card debts.

Credit cards may seem like saving graces, but it is smart to try and steer clear of them whenever possible. If you cannot help but use your card, keep track of every purchase that you make. Then, try to pay off every debt incurred as soon as possible. This prevents them from piling up and causing trouble in the future.

Retirement Plans

From your current standing in life, retirement may seem so far away. And it is. Still, it does not hurt to prepare yourself.

Think about the age you want to retire. Is it in your late 50s? 60s? Having an idea can better help you map out your plans for retirement. Then, look at the methods that you can use to save up for your golden ages.

If you are employed and making more than $450, it is likely that your employer is already making contributions to a Super account under your name. About 9.5% of your income is deposited into the fund of your choosing, which can help guarantee a good life for you in the future. Self-employment, on the other hand, means that you have to apply for a Superannuation yourself.
The greatest investment that you can make for yourself is done through future planning and close scrutinisation of your current finances. By knowing where you stand and what you want later on in life, you can better prepare yourself for what you need to do in order to grow.