Enjoying Your Golden Years

If you are between the ages of 20 and 30, there's a good chance that you have heard that this is the best time of your life to invest. You have the ability to take a little bit more risk than older people because you have a greater amount of time to make up whatever you might lose. This allows you to have a greater potential for profit. Here are some tips for investing in your 20s so that you can make the most of this time.

1. Look Into What Your Employer Will Match

Check to see if your employer has any retirement plans where some of every dollar that you put into a fund will be matched by your employer. Essentially, your employer is giving you money to save. The catch is that you can't touch it until you retire. These plans tend to be 401(k) plans or Roth IRA funds. If your employer offers some matching potential for one of these plans, make sure that you are maxing it out as much as possible in order to get the largest amount of free money available. This will allow you to save for retirement easily because you can set it up so that money is automatically withdrawn from every paycheck into your IRA or 401(k), without you ever being tempted to spend the money.

2. Take Sensible Risk

If you need hefty savings within the next ten years or less, stocks are not going to be your best option because there is a decent chance that they will fall during that time. However, in longer time frames, the market always rises. Be willing to take on a little bit of extra risk with an inexpensive, managed fund. Look for funds that don't have high fees or any fees at all and divide your purchases between stocks and bonds. Bonds tend to be safer but offer less interest. Stocks can maximize every dollar that you put in for a little bit more risk. Talk to a financial adviser for details and guidance.

3. Increase Your Savings Rate Each Time You Get a Raise

Your first job right out of college might not be paying you enough to put hundreds away for saving and investing each month. However, the amount you make is going to go up as you earn experience, and the amount of money that you save should go up with it. Every time you get a raise, increase your savings by the same percentage. This will allow you to speed up your saving rate without feeling like you need more spending money.