How should a younger people in their early 20’s invest their money

How should a younger people in their early 20's invest their money

This is the best time to be investing, as you have more time on your hands, as a financial manager for people wealth have come down to factor why people don’t make the most of their wealth.

1. People don’t start saving early enough.

2. They don’t invest right.

These are the top two reasons.

I will illustrate from my own research findings and how to combat these issues.

  1. Don’t start saving young

I did some research for a personal at age 20.

How much they would need to retire with the average cost of living (U.S) in line with the present level of inflation.

At, 20 now if you factor in inflation at 2% (CPI target level) this would equate to $5,704.61 (the present average living is $ 2,500 a month for a single person in the U.S). This would give 47 years to save this monthly amount for retirement.

With simple interest, saying you put in an annuity when you hit 67 to keep in line with inflation.

You will need to fund this lifestyle for 18 years (based on the average life expectancy), this would equate to $1,348,858.

This is actually exaggerated by the amount, research says you would need $1.7 million to retire so this would equate to $253,324.54 at 20 with inflation.

From personal experience, I see that no one in their 20s saves any more.

When I compare this to the baby boomers that statistically, save on average $153,000 while gen X by the same time frame save $22,485.

People, in their 20s seem more inclined by buying new clothes to impress their friends.

Want to look like


But the data is out their, look at the rising cost of housing only ¼ 20s will be able to afford a house and the few that do will be by donations by their parents, so saving is paramount more than ever.

This is what the research found-

Studies have shown few under 30s even invest in the market.

Younger Americans aren’t investing in the stock market—researchers think this is why

And when they are investing its in Crypto more often than stocks and bonds.

More people have debt than savings (U.K.)

Look at 20 year old habits if you save 20% of your salary for 3 month (on a average salary U.S) you will be in the top 60% of savers.

Even if you start saving you’ll be in the minority.

This is illustrated with poor U.S saving habbits.

If you have discipline and start saving young.

If you start at 20 you will need to save just $10 a days at 7% compounded yearly interest (less than S and P average)

The average less than 5% the average wage for people under 30 (U.S)

This table illustrates it

Point Number two

Where to invest?

As mentioned before 20s people aren’t going in the stock market. The stocks market historically has the best returns.

Ignore the flavor of the month. You have Noise these days, 24/7 on your phone computer ect. More people lose money going short term in hot topics than long term.


I see a lot of people investing in this-

And not so many investing in this-

Studies have shown time and time again, that the S and P 500 index outperforms 98% of fund mangers in the long term.

You have more chance of winner the lottery.

S and P has done 8.64% on average you compound this over 40 years it adds up.

So its about time in the market not timing the market.

So what, would I invest in?

Well simple go 80% equities large cap index funds 20% sexier. An alternative this could be gold emerging market, or even bitcoin.

Go long term in the market and make few changes the keep the charges lower.

Do this with the best investment advice you ever got

Compound interest as in your 20s this really adds up. As for example if you save just $6.66 a day though out your working life you will get if compounded at 7% a year $684,756.57 of interest that equates to 13 years o extra working at the average wage you get for saving so it have the option to use compound. What would you rather do work for an extra 13 years of be financially free.


If you are an investor in your 20s just start saving number 1 this will already put you ahead of the rest.

Then when you start investing simple in a low cost index tracker. Use compound interest and dollar cost averaging.

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