Time, when it comes to investing, can be tricky to deal with as it can be the best thing going for you, but it can also be a depreciator. If you try to start saving in your 20s there is a great case to be made for investing as much as you can. We like to tell ourselves we’ll save later, but later often turns into years and puts you behind the curve.
Investing in your 20s means you’ve got at least 30 to 50 years before your biggest investing goals. You may need money for your kids’ education or that dream vacation along the way but retirement saving is by far the largest chunk of money you’ll need in your life. Investing by age and finding the best investments for your 20s means looking at how long you have to retirement and your needs for cash from investments. Since you have so long before you need the money, you can afford to take more risk in your investments. Sure, your riskier stock investments might tumble in the next year or two but there is a 99.9% likelihood that prices will be higher over the next few decades.
One of the most important concepts in meeting your investing goals is changing your investments depending on your age and other factors. Studies have shown that the majority of investment returns are due to your choice of asset classes rather than picking the best stocks. Starting investing can be difficult enough without having to worry about finding the best investments. Here are 5 investment options that you can consider in your 20s:
5 best investment options when investing in your 20s
Unit Linked Insurance Plans or ULIPs:
This is a type of insurance plan that provides life coverage along with an investment option. Policyholders can choose from different financial instruments, such as bonds, equities, money market instruments for investing some portion of their investments. ULIP is an integrated plan offering growth and protection to the investors. In addition, this plan offers investors with the flexibility of managing their investments as per their personal requirements and choices.
If you want to invest in equities and bonds with a balance of risk and return, you can choose to invest in mutual funds. These mutual funds are managed by professional fund managers who are supported by experienced research teams, with real-time access to crucial market information. Mutual funds invest across different asset classes like equity, debt, and gold, allowing you to diversify your portfolio.
Stocks and Bonds:
Investment in stocks and bonds can prove to be one of the best investment options in your 20s due to their high return on investments. Stocks are a Security that signifies ownership in a corporation and represents a claim on the part of the corporation’s assets and earnings. They bear high to moderate risk. A bond fund buys bonds issued by the government, corporations and other entities. Its like lending money in exchange for predetermined rates. Stocks are riskier than bonds and financial returns of stocks are higher than the return on bonds. Therefore, the allocation between stocks and bonds is one of the most significant indicators of the risks and rewards of your investment portfolio.
Investing in real estate will put your financial future in your hands and under control. As you continue investing in real estate and building your portfolio, the amount of your passive income will increase and it will help you cover all your living expenses. Therefore, real estate is a good investment option to consider in your 20s.
Public Provident Fund:
It is the safest long-term investment option to consider in your 20s that will give a good return on investment. It is an EEE (Exempt-Exempt-Exempt) scheme, which makes it one of the best investment plans for investors. It is totally tax-free.
Start investing as soon as you can and you’ll enjoy time’s magical power of compounding. The greatest advantage in investing is time, so the younger you begin investing, the more time to have for your initial money to grow and compound.