5 Assets Anyone in Their 20's and 30's Should Invest In
Ensuring you have a comfortable retirement in your leaner years
If you are in your 20s or 30s, retirement may not be at the frontline of your mind if you're just starting out your career. You may be juggling to make ends meet or just get by with your starting salary.
Although retirement may seem like a long way off, it is never too early to start retiring.
Your unfair advantage
The unfair advantage is that you have:
- You have time on your side for your investments to compound.
- You have the energy to seek out investment opportunities.
Both of which become increasingly harder as you get older in life.
Compounding
Investing $100 a month for 40 years from the age of 25 to the age of 60 at a 7% rate of return will provide you with $262,481.
However, investing $100 for 30 years from the age of 35 to the age of 60 at a 7% rate of return will only provide you with $121,997.
Here are 5 assets to invest in
- Stocks, ETF, mutual funds, bonds
- Real estate
- Start-up business
- Alternative investments
- Education
Stocks, ETF, mutual funds, bonds
Based on the average S&P 500 the rate of return is around 10%. Index funds and mutual funds have diversified portfolios to ensure that spread your risk across different markets, companies and industries. Bonds typically have a lower rate of return around 2–3% but have a lower risk of default.
Real estate
The property increases oftentimes goes up in value. Land and property are reliable assets and banks are more likely to loan you money for physical property compared to for example cryptocurrency.
Real estate can be used to earn rental income or as your primary residence.
Start-up business
There are many start-up businesses that you can invest in. If you are familiar with shows such as “Shark Tank” or “Dragons Den” you may have a rough idea of how it works. You basically invest in small start-up businesses with the hopes that the business will take off and one day provide you with a profitable return.
“Start engine” is a website that allows retail investors with smaller sums to invest in start-ups.
Alternative investments
These could be cryptocurrency, art, wine, NFTs, or gold. These investments are not correlated to the stock market and will perform independently regardless of how the stock market performs.
This is a form of diversification for you. The return of these alternative assets may even be higher or lower than the stock market.
Below shows the DRC La Tache (wine) performance vs the S&P 500 in an article by Forbes.
Education
Education is probably one of the best and most lucrative investments you can make for yourself.
You are the vessel that will take you on this journey through life. It isn’t some investment, stock or business. This doesn’t mean you need a degree, or professional qualification to be successful. This means having an awareness to continue learning, reading and continuing your knowledge growth for many years to come even after you have left school.
It could be simple things like reading books, watching documentaries, attending seminars, conferences etc.
Final thoughts
If you are wondering when to start investing, the answer is now. The longer you delay and put it off, the lower your investment compounds and the fewer risks you are able to take on later on in life.
