Tips For Making Your First Investments While You’re Young
Money is a scary thing when you’re young, especially if you’re lucky enough to have a good chunk of it or a good job that’s going to provide you with a good amount in the future. But when you’re young, it’s up to you to make the decision of whether you’re going to be one of the people that blows your money on stupid things you feel you need in the moment or if you’re going to put your money into smart investments to potentially earn more for you in the future.
If you’re thinking along the lines of investing, you might not know where to start, and that may very well deter you a bit from seriously considering an investment. But don’t worry – most young people feel the same way, and that’s why there are plenty of tips out there to get you off on the right foot when it comes to your first investment.
There are some things to take into account before you ever considering investing any amount of money. For starters, is your credit card account under control? Do you have large amounts of student loans? Do you still owe a large amount on your car (which was probably your first real investment without you even realizing it)?
Also go over the amount of money you currently have in your savings account before you consider investing. Is there enough money there to sustain you for 3 months if you were to lose your job? Or do you live paycheck to paycheck? If you are struggling with any kind of debt or don’t have a savings account, investing probably isn’t the best idea for you at this point.
Choosing An Investment
Now, how to choose an investment…this is the tough part. It really all depends on what you are hoping to save for. Are you buying a new car in the near future? Are you starting to plan your retirement early (which is never a bad idea)? Are you saving for a house someday?
Depending on what you’re looking to save for and how soon you’ll need access to the money that you make based on your investment, you’ll have many options. Stocks are considered long-term investments, and a stock mutual fund is more widespread and less risky.
Your First Investments
Most financial planners will advise you to invest small amounts of money across a broad plane of investment options to start, so that if one investment takes a dip, another will likely be on the rise, so your overall loss (or gain) may be minimal.
Before you move forward with any type of investment, when you’ve chosen one that you’re interested in, make sure you call the customer service number associated with the account and ask for a prospectus, which will give you more information on the fund, the investments and the history of returns it has produced in the past.
Remember that there are options out there that allow you to make small investments in small amounts, and an investment of any sort, small or large, is better than no investments at all. It’s a good planning step for a financially comfortable future, and it’s important to take the step when you’re young. Just make sure you’re ready first!
Megan Willis is a freelance writer who loves following financial news. She recently saw the numbers for NQ Mobile on Google Finance and was inspired to write about her initial investments in the world of technology.