It may be a novel idea, but your twenties should be the most aggressive years of investing in your life. There’s no overstating just how useful your twenties can be in terms of financial freedom.
You simply have to know the steps to take and put forth a sound effort to divert your money in the right directions. If you began stashing away only $14 a day the day you turn 20, you will have saved a million dollars by your 64th birthday.
Investing is a passive way of being an aggressive investor who is serious about your financial freedom. Here are a few ways to get aggressive about your investments in your twenties, so you don’t have to struggle in your fifties.
Settle down with a 401k investment
Do your best to settle into a professional job early in life, and hop aboard the savings train with a 401k investment. Don’t forget to take advantage of your company’s generosity, and look into their matching offers.
Most places will offer to match your investment for as long as you work for the company. Just be careful not to job hop, because it’s customary that professionals must first work for a company for a few years to receive full benefits.
Focus on index funds and ETFs
You probably won’t be a stock market pro at the age of 20, but there are ways to invest in stocks without all of the messy trading decisions. Investing in an index fund spreads your money out among a range of different stocks.
If you choose to invest in the S&P 500, your investment will be spread across the nation’s top 500 largest companies. Index funds (or exchange-traded funds) are an easy way to look out for your financial future without getting your hands dirty.
Educate yourself on money management
Start learning money management skills as early as possible. The more you know about how to handle your finances, the better decisions you will make regarding money as you age.
Open up a Roth IRA
It’s likely that you’re still in a low tax bracket, and you can capitalize on that factor. Pay taxes while you’re young, so they won’t be as intrusive later in life. You can pay in a maximum of $5,500 a year, and you’re allowed to reclaim your contributions at any time.
Live a frugal existence
Live life on a budget as soon as you are building your own budget. If you train yourself to live on a minimal income, you’ll have much more to play with when you fully realize your financial maturity. By the time you retire, you’ll have a small fortune to enjoy.