Making Money Matter: 4 Investment Tips for Millennials
One of the best ways to grow your money beyond the rate of inflation is to invest it. However, with so many places to put your money, where do you get started? Let’s go over a few tips that may make investing easier and make it more likely that you earn an optimal return.
Passive Investing Is Ideal
Passive investing is ideal for younger people or those who don’t like a lot of risk. This is because you put your money in index funds that simply aim to track the performance of an index like the S&P 500.
Therefore, there is less of a chance that you will buy or sell equities based on emotion. Since these funds aren’t actively managed, you generally pay less in fees, which means that you keep more of your money over the long-term.
Work with a Financial Planner
Working with a financial planner like the Harwood Financial Group or someone similar can help you develop ideas that can help your portfolio in both good and bad economic times.
It may also help you develop your investor profile and make it easier to target investments that fit your risk tolerance. Having an adviser by your side can be helpful if you have questions about asset allocation, tax harvesting or other investment terminology.
Learn About Dollar-Cost Averaging
While you may not like seeing the value of your portfolio go down, it can provide an opportunity to strengthen it for the future. Dollar-cost averaging is the process of buying a stock at multiple price points.
If you bought a stock at $100, $80 and $60, you would own that stock at an average cost of $80. Therefore, the stock would only have to rise back above $80 for you to make a profit instead of $100.
Invest in What You Know
Investing in companies or commodities that you understand makes it easier to make a profit over the long-term. If you happen to understand what makes oil prices move, you should invest in oil.
If you happen to know what makes a currency move, invest in currencies. Ideally, you will have a mix of stocks, commodities and currencies in your portfolio.
While many young people are wary of investing after the Great Recession, it is important to be a player in the market. Over a long enough period of time, it offers consistent returns even when factoring in recessions and other slow economic periods.
Therefore, it is in your best interest to learn about the market and start investing as soon as possible.
Category: Investing
