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!

1. 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?

2. Consider your timeframe.

Sometimes it’s a long game. Depending on how much time you give your investments to grow will typically impact their return, as well as which types of investments you make. 

3. 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 of the traditional options for investing as a 20-something are 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 at times—it has its ups and downs, but it has historically trended upward for most 10, 20 and 30 year time periods. Hang in there!

• Bonds are a way of getting a more steady return back on your investment by paying you interest over a certain period of time. Depending on the type of bond or bond fund, you can offset their risk and return —we’ll touch on risk in a minute.

• Short-term investments are usually only a small amount of your overall investment portfolio, and we think of these as pretty liquid (available for you to access) with lower risk than stocks and bonds.

4. 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.

5. 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 receipt on these “pleasure purchases” and put the extra cash toward your investments.

6. Realize how much risk you can afford.

Eek! We usually discourage getting into risky business, but this type of risk can be good—if done correctly. Different types of investments can have different amounts of associated risk; for example, stocks usually come with higher risk, short-term investments are typically lower-risk, and bonds can be in the middle and on either end of the risk spectrum. Not sure how much risk you can tolerate? Try the Risk Tolerance Calculator in the Pocketnest app.

7. 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.

8. Ask your institution if they offer 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.

9. 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!

10. Keep track of your cash.

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