Investing in your 20s is probably more popular today than when I was in my 20s. Finding the financial tools available is much easier with the growth technology made in the past 20-plus years.
When I started investing, the internet had barely taken off.
America Online or AOL was the popular site of the day.
Microsoft Windows and Apple computers were around, but not like they are now. Today people can easily browse the internet on their smartphones.
Even though the tools are available, there is a lot of information available that can overwhelm any 20-year-old.
That can be a good or bad thing. There is so much information, so you need to focus on exactly what you want to do.
For me, this is easy for someone who’s invested for 27 years. In fact, April was the month I made my very first investment.
I was assigned to my first unit in the Army and was stationed in South Korea. Within a few months, my boss told me I should invest.
He didn’t give me the tools, the secret to invest, or tell me how to invest. He just said you need to invest.
Without Yahoo Finance, CNN Money, The Street, and other websites, I learned the old-fashioned way. I read, and I read a lot.
At the local store, I picked up Money Magazine which stopped publishing in June 2019. I read the magazine cover to cover learning new financial terms and phrases. So each month, I couldn’t wait for the next article to arrive.
At the same time, I requested prospectuses from financial companies on the various mutual funds they offered. I read investing prospectuses on funds from Vanguard, T. Rowe Price, Fidelity, Janus, and others. I also read those cover to cover.
The key to investing is learning as much as possible before making your first investment.
I spent close to six months reading financial magazines and prospectuses before making my first investment.
Today there are so many scams out there, and it’s an easy way to lose your hard-earned money.
Investing is a long-term process. It’s not like the lottery where you can buy a ticket and win the next day.
It’s a fact that more people who buy lottery tickets lose money at a higher rate than those who invest in stocks.
This is almost a guarantee you’ll make money if you invest in something. It won’t happen overnight, but eventually, the investment will go higher.
Focus On One Thing
I haven’t followed one path to grow my wealth.
Over the years, I’ve invested in mutual funds, real estate, stocks, precious metals, cryptocurrencies, and sports cards. Early on, my investment lost money. Technically, I didn’t lose money, but on paper I did.
This was after the Asian Market crash in 1997. My investment was going higher, but then in the next few months, it would go down.
Not every investment goes up all the time, which was what I was expecting.
While I was reading Money Magazine and other financial stuff, the biggest theme was diversifying your portfolio. In the investment world, that means to have your money in different sectors of the stock market — growth, international, blue chips, value, bonds, and so on.
That’s what I did. But after the 1997 crash and other crashes later on (Y2K, 9/11, 2008 financial crisis, the pandemic), I saw the general philosophy of investment advisors was wrong.
- If there is a market crash, just about everything in stocks goes down.
- If there is a real estate crash, many real estate prices go down. Some real estate markets go down later than others.
After these crashes, I looked at other asset classes to invest in. I don’t recommend this for everyone since it is easy to lose sight of one sector compared to others.
Generally, when the stock market goes down, other investment sectors go up.
When the real estate market goes down, other sectors may go up.
When the real estate market goes down, the cryptocurrency market may go up.
This is the general philosophy I follow.
Of course, there are pros and cons to everything.
You could go all in on stocks, and when the market is down, you can buy more stock at cheaper prices.
The same is true in real estate, cryptocurrencies, and other markets.
Each investment has its own cycle.
If you are starting or years into your investment plan, stay focused on one area. When you become very successful in one investment, maybe one million dollars for example; once you’ve achieved that, then you can try investing in other areas. Until then, just focus on that one area and know it better than anyone else.
Now, let me share the five tips you should follow on your investment journey.
- Have a Goal
- Invest consistently
- Sacrifice Today For Tomorrow
- Fail Often
- Visualize Your Future
Have a Goal
When I started investing, I set a goal to make a million. When you have a goal, it’s easier to follow.
Make sure the goal is realistic on your journey.
To start from zero and go to a billion dollars is hard to do. If your goal is to be a billionaire, then you should aim for millionaire first.
Chasing a big goal is great but it can also lead to frustration along the way. So choosing a slightly smaller goal is better. Once you’ve achieved that, then go for the billion.
Invest consistently
The key to growing your wealth is investing routinely. Some like to call this paying yourself first.
One thing I do is to have money taken out of my account and use that money to invest. Of course, you have bills to pay every month — your housing, utilities, car payment, insurance, phone bill, and so on. You need to add investing as another payment.
When you invest every month, this amount will gradually grow over time.
With technology today, it’s easy to have money automatically withdrawn from your account every month to add to your investment.
Sacrifice Today For Tomorrow
Too many people want to get rich today. With investing, that is usually not the case.
You are investing for your future.
The growth of your investment will grow over time.
One month you’ll have $1,000 invested and then another month it’ll grow to $10,000, $100,000, and so on.
Instead of splurging and buying the latest iPhone, why not invest in Apple stock?
Having a new phone is great, but think twice before you buy something. Your investment will show a greater return.
Fail Often
When investing, it’s easy to make a mistake. Just learn from your mistake, and try not to make the same mistake again.
The earlier you make a mistake, the better. It’s likely your mistake will be a small amount.
If you make the same mistake years later, it could be a more expensive mistake.
Instead of losing hundreds of dollars, you could end up losing thousands of dollars.
So don’t be afraid to make a mistake. Many people do when they invest.
Visualize Your Future
As you invest, have a goal.
In the chart below, the Federal Reserve Board shared the average amount in retirement people have saved by age.
To some people, the savings may be about right. But to others, it may not be enough.
That’s why it’s important to invest early and often.
Saving and investing your money is an important requirement you should not avoid.
The earlier you start investing, the better. That’s why you must start investing in your 20s and not delaying it.
This article is for informational purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any significant financial decisions.