Ask anyone in their 40s and a large majority of them will say that they wish they could relive their 20s. That is a decade when most people are freshly minted graduates who are just starting their professional careers. Although entry-level salaries can seem insignificant when measured against the expenses most 20-year-old’s have (including significant student loan debt), understanding how to maximize and leverage your income at the micro level will translate into macro results years down the line.
Let’s be upfront here: Many 20-year-olds are not entering the job market that their parents and especially grandparents had. Security in the form of 401Ks and gold watches are not the norm any more. Gone are the days when it was enough to fastidiously sock away 10 percent of your income and expect it to bloom into a fortune by the time you were ready to retire.
That doesn’t mean you can’t leverage your greatest asset: your youth. Time and compound interest are the closest things to magic that you’re going to find, so use them. Here’s how:
1. Knowledge is power — and money
You are living in an era when there is more information about investing available than ever before, and it’s more accessible to the average investor than ever before. If you spend the time educating yourself about the markets (both domestic and global), trends regarding commodities and the channels for how knowledge flows, you can gain insights that will help inform your portfolio decisions. Stocktwits.com is an amazing online community that moves at the speed of the markets. You can watch and learn in real time about market volatility as well as identifying voices within the space that speak to experience and insights that may prove useful.
2. Understand what you value
This may seem a bit more esoteric, but Millennials, as a generation, are increasingly looking to align their money with their lifestyle values. Impact investing, social entrepreneurism and triple bottom line philosophies are informing their choices as to where they put their money. Understanding where your return on investment lands on a human scale may be increasingly important. Therefore, it is worth your time to see where your fund stacks up. U.S. News and World Report has compiled this list of the top socially responsible funds for your consideration. The 2013 Forbes Magazine Investment Guide also offers dozens of ideas to help you build, protect, and enjoy your wealth.
3. Learn the rules of the road
This is exceedingly basic, but its inclusion is based on the assumption that investing is a new experience for you. For example, if you want to get to Chicago, you wouldn’t consult a map of California. Therefore, familiarize yourself with terms and norms of the language of business and investing. The NASDAQ site is an impartial and resource-rich place to start. Here you’ll find tutorials, insights, and glossaries containing the information you’ll need in order to navigate the financial landscape.
Managing your portfolio is a personal exercise that will depend upon your comfort with risk, overall financial goals and your ability to adhere to your plan(s). With time on your side, it’s entirely possible that you can attain a comfortable standard of living now even as you provide for a healthy retirement in years to come.
Mandy Fricke submitted this post. She works in community relations for Earn MBA Degree, which helps you explore MBA degrees. Outside of work Mandy enjoys biking, reading and traveling.
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Category: Money Basics