There’s no escaping it: Money is important, even when you’re just starting out in the adult world. And in our previous piece on “The Importance Of Saving money”, we covered a few ways you can make your money work for you –– something young professionals ought to look into as soon as they have the income to afford it. While it’s pretty common knowledge that investing is the best way to make your current wealth grow however, there’s some ambiguity around how exactly to invest, and where you should keep your savings.
First and foremost, strategic investing means buying into retirement accounts. But a lot of young professionals will also look to build on their income and savings through more growth-oriented investments. In this post, we’ll go over some tips on how to do this responsibly and productively.
Study Markets
Markets and the economy, in general, are quite volatile, with significant changes occurring every day. For this reason, you may want to make a routine of studying the current investment market and keeping tabs on sectors or assets you’re interested in. Many people start out by reading books about investing, the economy, and how market changes can affect portfolios. Once you establish a strong base of knowledge, you can take up more current studies. These days, many find that daily or weekly podcasts are helpful in this regard, with a list at The Balance having pointed specifically to The Investors Podcast Network, Stacking Benjamins, and Money For The Rest Of Us as some good ones worth checking out.
Practice
No matter how or where you end up investing, or how much studying you may do, getting a hands-on feel for how major markets work is a good idea. FXCM’s overview of demo accounts clarifies that this can be done through what is essentially a full simulation of a major market (whether it be stocks, forex, or even the commodity trade). These simulations imitate real market conditions and allow you to trade with fake money, so that you can do everything you’d do when running a real portfolio without any risk or consequence. There are also some games you can find online that more or less simulate the market, and if you’re more inclined toward DIY, you can even gain some experience tracking trades on your own spreadsheets.
Explore Index & Mutual Fund Options
Index funds and mutual funds offer great ways to start investing for a lot of beginners, but before selecting one you’ll need to decide if you’d like to have a passive or active role in the investment process. If you want your funds to passively earn money without too much input on your part, an index fund is your best option: It’s tied to an automated index, which a piece at CNBC argues makes it likely to outperform more actively managed portfolios. If you’d like to make more decisions about your portfolio, meanwhile, then you can look into a mutual fund. In this case, a broker you trust will make decisions almost daily about where the investment money should go, but you may have input, and can decide if and when to withdraw or add money based on the portfolio the broker has put together.
Apps & Platforms
Exploring apps and platforms with automating and assistance features can be a godsend, especially for those who are new to investing. Many apps (like Robinhood and Stash, to name a few) give you tips and advice on how to invest your money, and some of them even come with certain automation functions. We do recommend, however, that you read the fine print on automation (actually, this is good advice when it comes to all things finance). After all, you don’t want to accidentally lose any money because an automated function failed or did something you didn’t want it to do.
Through these approaches and investment methods, young professionals can be prepared to put their money where it will be most likely to grow, and manage it effectively.
Written exclusively for Onstarplus.com
