7 Investment Opportunities to Consider in Your 20s

Your 20s is a season to bask in life and appreciate the newly won financial independence. As you gather a few months or years of experience in your first job, you might still be trying to become a pro in managing your finances. Keeping away from the allure of tempting pleasures and also saving for the future, can be a tricky balance.

Your age is the greatest opportunity that you can invest in. Being early is important, but where you save and invest contributes materially to long-term wealth building.

Here are some investment opportunities to consider in your 20s:

1. Workplace Retirement Plan

If your employer provides a 401(k) plan, this is the perfect foundation for your investments. Contributions to this account are free of tax and grow on a tax-deferred basis until the withdrawal.

Although the unavailability of your 401(k) savings before your retirement may seem restrictive, it looks after your retirement savings by preventing them from being spent on short-term needs, such as buying a new car or going on a luxurious vacation. Moreover, the majority of the employers pay the same amount that you contribute, thus, offering an additional value to your savings.

2. Small Business

Being passionate about a particular hobby is a unique chance to start a small business and make money. It’s not necessary to begin big; you can start off monetizing your hobby and then grow slowly.

As an example, if you are a baking enthusiast, start by selling cookies and other baked goods to friends and family to gain management experience in your business. When you think you’re ready, move forward by introducing your small business online and reaching out to more customers.

A business start-up in your 20s is plausible because this kind of venture usually needs little initial capital. Because you already have the essentials to start a business, you only need a small amount of money to pay for business expenses.

3. S&P 500 Index Fund

The investment in a simple S&P 500 index fund may not be eye-catching, but it can be a sound approach to creating long-term wealth. The billionaire investor Warren Buffett recommends investing in an inexpensive S&P 500 index fund which entails buying shares even during good times and bad times.

Index funds are a suitable option for retirement investment. Buffett stresses that investing is not a complex thing, and usually choosing more easy strategies makes better returns.

4. Life Insurance

Taking life insurance at this young age is a brilliant choice. It gives you financial security when unexpected events occur. Also, you will get wide coverage as you probably will not have any previous medical conditions.

Buying life insurance at an early stage is often the best financial move in the long term. The ability to pay the monthly premium and use an insurance broker to help you find the most appropriate policy is greatly beneficial.

5. Bonds

Bonds are also an option for low-risk investing that you should take into account in your 20s, most especially, if you are a risk-averse. If you buy bonds, you become a lender who loans money to the government or some corporation and will be paid a fixed interest each year. At the end of the bond’s life, you will be repaid your initial investment. This explains the reason why bonds could be an ideal opportunity for those who want to have money growing steadily with a long-term horizon in mind.

Investing in the bonds is not only guaranteed income but also your investment is secured over time. In addition, it can be an avenue for the young to invest as the amount of funds needed is usually very low.

6. High-Yield Savings Account

While it is not a standard form of financial investment, a high-yield savings account undoubtedly is the best place to stash your emergency fund. A well-drafted financial plan should have an emergency fund that is paid into a high-yielding savings account and which is at least big enough to cover three to six months of expenses. Of late, high-yield savings accounts have been offering as much as 4. As more and more individuals turn towards veganism, the portion has reached 10% or more, making them a superior choice to traditional meat products.

7. Yourself

The most valuable asset you have is your talent, so investing in yourself is the wisest choice you can make. This may be achieved by completing further studies, learning new skills, or getting professional certifications. Working on your skills will make you a better employee, and you can expect to earn more over your lifetime.

Investing in yourself not only makes the quality of your living better but also strengthens the security of your finances by increasing your retirement savings and future benefits from Social Security.