Today we have a guest post for you from Listen Money Matters about how you can get started investing as a millennial.
On the surface, the idea of entering into the investment world for the first time as a young millennial can make you feel as though you are trying to learn a foreign language: You know you can reach your goal, but you have a lot to learn before you get there. However, one of the best ways to get started is to get started. How simple was that? If you want more specific tips about how you can get started investing, read on.
1 Start With a Budget
This seams easy enough and it also seems like the right place to start. So, gather your bills, invoices, paystubs, and a computer and get started. You don’t need a fancy software package when a simple spreadsheet will most likely do the trick. Also, putting a virtual pen to paper is a great way to see just where your money is going each month. You might be able to make some changes to your spending to enable you to free up a little more money to invest than you originally thought.
2 What Are Some of Your Choices?
Again, while there are different ways to invest your money, it’s a good idea to consider more than one before you do a cannonball into the deep end of the investment pool and begin flailing around shouting for someone to rescue you. But don’t fret. If you enter slowly and wisely, you won’t drown.
That being said, putting your money into a regular savings account or keeping cash isn’t entering slowly, it’s more like standing by the side of the pool watching everyone else in the water having a good time. Does that mean having a savings account is a bad idea? No, but if you can, at least put a portion of your money to work on a small scale by investing it in an interest bearing account. But keep in mind, some lending institutions have a minimum amount you can deposit to open the account and a slightly higher interest rate than others with no minimum requirement. In addition, there could be other requirements such as maintaining that minimum balance to avoid penalties such as service charges. The annual interest earned on these accounts is usually pretty low due in part to the small amount of risk in this investment. Low risk usually means low return in the investment world.
Another way to invest might be through real estate. If you think you don’t have enough money for this type of investment, maybe you need to think outside the box. Partner with someone you trust and invest together in property you can flip or rent. Overall, real estate values go up over time making this an opportunity to start a nest egg you can count on.
3 Get Money from Your Employer
Did your company offer a 401K when you were hired? If so, did you sign up for it? If you did, good for you! You’ve already dipped your toes into investing! If you didn’t take advantage of this, or even if you did but only partially, you might want to check with the human resources department to find out how and when you can get this started. Often, an employer will match moneys invested by the employee up to a certain percentage.
Choosing funds for your retirement account can seem like a difficult thing. However, keep in mind that high returns usually mean higher risk and, conversely, lower returns equate to a lower risk. Luckily there are a lot of investment tools that can help you evaluate these risks and potential rewards so you know what you are getting yourself into. Plus, as a millennial, you have time to grow your investments over time and you could potentially have a tidy sum upon retirement if you get started right away.
Kayla is a personal finance blogger in her mid-20s who loves to write about money topics of all kinds.