Investing is a great way to earn passive income that helps you secure finances long-term. Although many people are doing it, it can be challenging when you’ve just started exploring it as a young adult. You have several competing demands in your life: career, student loan debt, utilities, rent and other bills.
You’ll need at least basic knowledge in investing, which is something you might not have studied in school. The good news is that there are now more options for entry-level investors than ever before. Here are the best investment options you should consider helping you get the most out of investing during your younger years.
Forex trading is one of the most accessible and easiest investing options you have. It works by allowing investors to buy a considerable amount of foreign currency and earn profit by determining where your elected currency’s value will move, giving you huge returns when done right.
You can start trading currencies with as little as $100, but like with other investment options, it has its risks, so it’s best to see a broker from companies like Fair Forex. They can help you make wiser decisions and establish a steady income flow over time.
It’s no secret that the stock market is one of the best places to invest your money in, but not many know how to diversify their portfolios to avoid losing money. Investing in index funds can be a great solution to this. They’re a pre-packaged bundle of sticks that tracks a segment of the market, offering entry-level investors an easy way to build a decent portfolio.
Money Market Funds
Opening a money market account is a great way to increase your interest rates as it gives you more than the usual amount offered in a standard savings account. However, some aren’t Federal Deposit Insurance Corporation (FDIC) insured, so it’s best to be careful and work only with established money market fund providers to prevent your investment from getting placed at a higher level of risk.
Short term CDs
A short term certificate of deposit (CD), as its name implies, is a short-term investment and is usually bank products holding a predetermined amount of cash and allowing it to garner interest for up to 3 months to five years. These are FDIC-insured up to the limit of $250,000, providing you with a lucrative and risk-free way of earning interest. However, when you deposit money into your CD, you need to give it time to mature, or you’ll be facing an expensive penalty. If you often tap into your savings, a CD isn’t the best choice for you.
Traditionally, investing in properties is one of the best investments any aspiring investors can buy, and it remains to this day. It gives you direct control over the property’s returns, meaning you can either rent it out or live in it and sell it after a couple of years. However, the value of properties widely varies as the housing market, interest rate environment, and rental prices change regularly.
So, if you plan to live in one home for less than five years, it’s best to rent out a property instead. That’s because it takes 5 to 7 years for a property to gather enough equity for it to be bought.
The best investment decision you can make as a young adult is to put away your money wisely and learn about the best investment options, such as the ones mentioned—preparing you for financial success in the future.