I was trying to explain to my friend Karen, who just turned 21, the concept of beginning an investment strategy as soon as possible. The keys to investing are to start early, to research the trends of where society spends its money and why, and then to create a pattern of investing in growth industries and areas. Karen is smart, socially aware and resourceful, which makes her the right type of person to understand that investing is a financial must in the uncertainties of the 21st century. Our parents grew up in different times when people held jobs for life if they wanted to, when homes were imminently more affordable, and when social trends weren't so volatile.
The advent of the internet has made investing so much more accessible and global, so all it really takes is some desire and awareness of what one needs to do, to get started. We were all taught at some point that saving money in a bank account was the most financially savvy thing to do for a young person, and it's not bad for fluid monetary assets, but if you want your money to grow faster than you spend it, you want to put away a little money each pay period, (anything you can afford, say $25 a check or so) that you consider completely unavailable to you so that it can do its silent job of compounding itself. For a while, I put money in my stock market investment account through an automatic payroll deduction system that deposited $50 a month into my account. With a little help from my financial advisor, I picked stocks that were slightly on the aggressive side and then I left my account alone. In fact, I would have forgotten about it every month except for the statements that came in the mail. The investing starts out slowly and then gets more pronounced as the balance grows.
In the meantime, one shouldn't really just forget about one's investment portfolio. The thrilling thing about investing in one's twenties is that since you have about 40 years until retirement, you have plenty of time to research investment trends that can yield large returns. For instance, if a 21 year old invested a hundred dollars a month in Microsoft in 1980, she would be significantly wealthy today and the key would be that she wouldn't even miss that $100 a month once she got used to it. Some investment companies make you open an account with as much as a whopping $5,000, while others will only ask you to make a commitment to depositing some steady amount of money each month. Selecting the right investment strategy is important for the type of lifestyle that you lead or want to lead, so no amount of research is ever really wasted.
Well, my friend Karen spoke to a few investment companies like I suggested and now she's investing in a diversified portfolio at a conservative and painless $50 a month. The important thing is that she started early, giving herself plenty of time to research how she might want to change her investment portfolio in the future and build it as time goes on. For more information on how and why investing is good for your future, see a certified financial planner and make a definitive financial plan for your future.
