Too often, investment advice you see on the Internet and in books takes an all-encompassing approach, offering tips for each and every person who wants to put money into the stock market. This is fair enough for a lot of broad, general ideas, but it’s also important to keep in mind that investing strategy differs greatly from one person to the next.
Some favor a long-term approach, and some opt for day trading; some are comfortable with stocks, and others prefer alternative means of investment; and most importantly, some have experience and others do not.
It’s young professionals and so-called millennials that most frequently fall into this last category of people interested in but inexperienced with investment. And beginning investors in today’s world require a whole unique set of tips. If you happen to be a part of this group, these are a few such tips to get started with.
Tips For Young Professionals
Put Debt First
It’s common to hear that young people should begin investing as early as possible, in order to give funds the most possible time to accrue value. This is still a good strategy in a vacuum, but it’s also vital for young people to recognize that they’re starting their professional lives with significantly more debt than previous generations in many cases.
In 2015, nearly 71 percent of graduates left their alma maters with debt, with that debt averaging about $35,000 per student. And just as investments can grow exponentially over time, debt can be compounded by interest as well.
Thus, it’s at least worth considering for a lot of millennials to put any spare income toward clearing debts, or even to build an investment strategy around paying off debts. The sooner they’re out of the way, the easier it is to look to the future with finances.
Invest In What You Know
When you do get around to investing some of your money for the first time, you’ll quickly realize just how huge the stock market is, or how many potential assets are out there. Furthermore, you’ll quickly pick up on what’s trendy: tech companies dominate the headlines, alternative energy companies are up-and-coming, and you’ll always see things like oil, gold and the like on CNBC stock tickers.
It can be a little overwhelming, and sometimes the response to that is to seek out the big names that get the most coverage. Instead, try to buy what you know.
This doesn’t mean blindly putting your faith in a company just because you have an emotional attachment to its products. Rather, it means lending your attention to the parts of the market you already have an understanding of, so that you can use your personal knowledge as a foundation when you start learning about investment strategies.
Look Into Investing Apps
Traditionally, investments are done through mutual funds or brokers the first time around. In both cases, you’re required to pay fees, and your investments go through professionals who actually conduct the trades.
However, the past few years have seen the rise of several mobile investing apps, a few of which basically eliminate the need for professional support and, more importantly, fees. With some of these apps, you can buy stocks in smaller amounts than you might otherwise be able to (which is ideal for when you’re just starting out), and you can make trades for free.
It’s not necessarily the right approach for everybody, but it can be a very attractive alternative for young, independent professionals looking into the markets with caution the first time around.
Broaden Your Understanding Of Investment
All of the tips above concern when and how to go about investing in stocks or similar assets. However, there’s also a popular argument that instead of trusting in the stock market, young people should be investing in themselves.
That can mean any number of things – perhaps most notably the idea of further education that can help in the workplace or even with financial literacy specifically. It may also mean putting aside money for a personal venture or business plan, or even simply saving up or eliminating debt, as discussed earlier.
In short, consider investing in a broad sense, as a means of building up your future, rather than exclusively as a stock market venture. Remember that investing in yourself first is the best investment of all time.
Taking all of this into account, millennials and young professionals can gain a better understanding of what it really means to start investing. The specific strategies of any given venture still require a great deal of care and education, but the foundation of understanding is the most important part of it all.