10 Investment Tips for 20-Somethings

Quick and easy tips to build positive investment habits

Investing…isn’t that the thing your parents do? With stocks and bonds and whatever-else-they’re-called? Yes, you’ve almost got it! Now it’s your turn! It’s easy to start your investment journey now—your future self will thank you.

We’ve rounded up 10 investing tips to help you navigate these new waters. Time to put on your grown-up pants!

Know your goals

These can be both short- and long-term. Besides generating more cash (duh!), how will you use your investment cash? How will this money benefit you financially, both in the near-term future and longer down the road?

Consider your timeframe

Sometimes it’s a long game. The amount of time you give your investments to grow will typically impact their return, as well as the types of investments you make. 

Allocate your assets

Stocks? Bonds? Short-term investments? Oh my! These are your asset allocations. Sure, the name might sound fancy, but it’s really just how you divvy up your investment holdings. Some traditional options for investing as a 20-something include stocks, bonds, and short-term investments.

• Stocks usually have higher returns that can help you meet your goals when evaluated over a long time horizon. Remember that the stock market is like a roller coaster—it has its ups and downs, but it has historically trended upward over most 10-, 20-, and 30-year periods. Hang in there!

• Bonds are a way to get a steadier return on your investment by paying you interest over a set period. Depending on the type of bond or bond fund, you can offset its risk and return—we’ll touch on risk in a minute.

• Short-term investments usually make up only a small portion of your overall investment portfolio, and we think of them as pretty liquid (available to you) and lower risk than stocks and bonds.

Invest a little at a time

A simple tip to remember: a little + a little + a little more = a lot! Any amount that you’re able to put toward your investments, no matter how big or how small, can help.

Use the round-up rule

Treating yourself to taco Tuesday with margs? Finally letting yourself splurge on the new kicks you’ve wanted (and deserve!)? Round up your receipts on these “pleasure purchases” and put the extra cash toward your investments.

Realize how much risk you can afford

Eek! We usually discourage risky business, but this type of risk can be beneficial—if done correctly. Different types of investments can carry different levels of risk; for example, stocks usually carry higher risk, short-term investments are typically lower-risk, and bonds can be on either end of the risk spectrum. Not sure how much risk you can tolerate? Try the Risk Tolerance Calculator in our app.

Mix up your investments

Ah, diversification. Traditional financial professionals will tell you to invest your money in different types of holdings (some stocks, some bonds, some cash) for a traditional and "balanced" return. The ingredients (read: your different investments) that make up your recipe (read: your investment portfolio) are up to you. Just keep an eye on how much money you’re putting toward low versus high risk investments.

Ask your institution whether it offers a digital trading platform

Oh, how we love the golden age of technology! Are you scratching your head when trying to uncover which investments are right for you? A digital trading platform may be a fit for you.

Enroll in your employer’s retirement plan

Although you may be facing student loan debt at the current moment, and retirement feels like something far off in the distance, enrolling in a retirement plan is something you should consider. No 401(k) with your current employer? You still have options!

Keep track of your cash

Especially now, it’s incredibly important to have a budget and know where the next dollar needs to go.