Millennials prefer to live in the moment, spending their incomes on maintaining a good quality of life and using their savings on holidays, experiences, events and big ticket purchases. With retirement being out of sight and hence out of mind, what takes a back seat is investing this money for a secure future. While investment may seem like a daunting word that you don’t need to focus on right now, the sooner you start the lesser regrets you shall end up with.
Below are 6 tips that can help young professionals with their investment decisions:
Start now. Start small
When is a good time to think about investment you may ask? The answer is now. Typically the younger you are, the less financial obligations you have at the moment. This is reason enough to start making smart choices right away for bigger financial responsibilities coming your way such as a wedding, children, mortgage, etc. Even if you have just started working and received your first pay check, exploring investment options this early on means you have more time for your investments to grow in value.
Learn about your options
While it may seem like a whole new language, you don’t have to be an expert at the subject. What you need to do is educate yourself of the jargon. Investment will always involve some kind of risk, are you willing to go all in or would you rather take baby steps and see how it works for you? Do you want to lock in your money for long-term or play around with short term options? These are some basic questions you might find yourself asking. Explore your options to choose a strategy that suits you best.
[Related: A beginner’s guide to investing in gold]
Don’t put all your eggs in one basket
You may have heard this one before, it’s always wise to not put all your eggs in one basket, in other words –diversify. Invest across a broad spectrum of categories such as stocks, real estate, bonds, CDs. Consider a mix of investments with regular dividends, those with long term growth potential and a small percentage with high risk but good returns. This way if an investment suffers a downturn, your portfolio won’t suffer a massive set-back.
Don’t invest money you‘ll need
It isn’t a great idea to invest money that you would probably need soon. This is because if the stocks go down or the market isn’t in great shape, you wouldn’t have enough time to wait for the market to recover to recoup your money. Experts suggest investing money that you wouldn’t need for at least the next 5 years.
Don’t follow the herd
There will always be hype about certain companies with hot stocks that are the talk of the town. It’s possible that the company has already passed its best days and it’s only the buzz that still lingers on. Instead of following others blindly do your research, study the past numbers and seek expert opinion if you must and only then make your investment decision.
Think long term
Your small investment earned you good returns- that’s great news! Instead of hitting the mall and splurging every dirham you made, here’s a better idea. Reinvest your returns and make more money from the money you made. With that said, be extra cautious to not treat the investment play as a gamble. Just because something worked for you in the first go does not imply it always will. Be as careful with your investment decisions as you were the first time around.