If you are just getting started in life, your head may be spinning with ideas on how you can invest your money. The good news is that you can easily break up your investment choices into a few standard categories to make this process easier. The goal of your investment strategy at this stage in life is to make decisions that will help you to build wealth as you age. Here are five great investments to make as a young adult.
1. 401k and IRAs
It is conventional wisdom that starting your retirement account as young as possible is always sound advice. Most Americans are not lucky enough to enjoy a pension fund through their employers, making it important that you take matters into your own hands to pay for your retirement.
The younger that you begin saving for this golden season, the more that you will be able to enjoy the good life when the time comes. There are a plethora of options available to you to fund your retirement. Many organizations offer 401k programs for their employees, making it easy to put away money before it even hits your paycheck. You can also look into independent IRAs and other types of accounts. A financial advisor can walk you through all of the options so that you find the best options for your budget and needs.
2. Real Estate
When it comes to investing, real estate is still the king. In addition to your primary residence, there is a world of money-making opportunities in the real estate industry.
A professional at a real estate agency can help you to navigate the tricky 1031 exchange so that you can maximize the money that you have to invest in the market. You will feel comfortable putting your money toward this investment. For instance, say you are looking on the web and come across Kay Properties who specializes in the real estate world, you will want to read all the different kay properties reviews on their site and how people benefited greatly to feel comfortable with putting your hard-earned money into the real estate industry. The experts will help you to minimize the capital gains taxes you owe when you sell your investment properties.
3. Index Funds
The stock market continues to be one of the most lucrative places to invest your money. Index funds are defined as prepackaged bundles that track a certain part of the market with the most common being the S&P 500.
Investing in index funds is a good practice for those just getting started in building a portfolio. Because they do not require a hands-on approach of a financial advisor, index funds are generally less expensive to get started with because of their lower fees.
4. Higher Education
One of the best investments that you can make is in yourself. Even if you already have a college degree, you will likely find that you can improve your potential career trajectory if you are diligent about continuing your education as you move up the ladder.
This continuing education can come in a number of ways. Depending on your career goals, you may have to pursue a master’s or doctorate degree. However, continuing education does not have to be in a traditional college setting. Perhaps you want to take specialized courses or enroll in workshops or conferences designed to advance your career goals?
5. Pay Off Debt
While it is not exactly a concrete investment, paying off debt while you are still young is critical to your success in building a nest egg as you age. Debt can weigh you down, making it nearly impossible to put away extra money. This makes it important to make debt payoff a top priority during this season in life.
If you are unsure how to tackle these debts, most advisors will recommend the snowball method. Using this method, you pay off the lowest debt owed first, moving on to the next highest amount when this amount is cleared. As you pay off each debt, take the money that you were using to pay toward that specific bill and snowball it into the debt you are working on next. This approach will help you to see immediate results, encouraging you to keep at it.
Conclusion
The bottom line is that you are already doing a great job if you make a habit of saving regularly as a young adult. Where you put that money is not as important as the fact that you have made the conscious decision to invest your money and build your wealth.
