Young people aged between 20s and 30s are often faced with an investment dilemma. Many of them are fascinated with the idea of investing but are not equipped with the knowledge and tools required for successful investment. There is so much information about investment splashed all over the web but is not usually tailor made for the needs of young investors.
Before carrying out any investment decisions, one should understand what investment entails and the risks associated with it. It’s important for one to think long term and learn some time management skills. Good investment strategies are very important in assisting a young person to secure the future financially. Good investment strategies are outlined below.
Setting saving standards
Young people who have just joined the workforce can save a certain percentage of their gross income. Depending on the amount earned, one can save 10 to 20% of their monthly salary. It’s important for one to set a savings target. For instance, if you save 20% of your monthly grows income then you will have saved money amounting to your annual gross income in a period of five years. If one has no other major source of funding then saving is a good way to start investment planning.
Anybody who intends to become a good investor should control his/her spending. Spending control enables you to save enough money for future investment opportunities. You should avoid living beyond your means or impressing other people. For instance, if you are required to by car, always try to pay cash. It’s important for young people to understand that no investment can work for them without limited spending.
Making investment decisions
There are many forms of investment that young people can venture in. Before making any investment decision, you should first assess your financial position. It’s important for you to understand your existing goals and how you can tolerate risks. You are advised to establish and maintain an emergency fund.
Any young person who intends to invest for the long term should consider investing in the asset categories that have a higher risk. Thus you should go for bonds or stocks as opposed to cash equivalents. You should be able to stand the current economic troubles to achieve more in the long term.
One should seek to invest in more than one asset category so as to reduce the risk of losing money should one of them fail. Historical analysis shows that stocks, cash and bonds are not affected in the same way.
These investment strategies can assist any young person, regardless of their educational background.