The 3 Best and Most Important Investments to Begin in Your Twenties

6 July 2017
 Categories: Finance & Money, Blog

Investing is one of the best things you can do in life to prepare for your future, yet many people do not begin thinking about this until they are in their 40s or 50s. If you are currently in your 20s, now is the time to begin planning for your future, and here are the three best and most important types of investments you should start working on right now.

An Emergency Fund

An emergency fund is a short-term type of investment designed for one key purpose – emergencies. If you do not currently have any money set aside strictly to pay for emergency expenses that arise, you should create a fund, and you should do this soon.

The amount of money you should have in your emergency fund is up to you, but it might be wise to have enough money in it to cover your monthly expenses for three to four months. If this seems like a lot of money, don't panic. You can start the fund with a small amount of money and add to it slowly. For example, start an account with $100 and try adding at least $100 to it each month.

When you create this account, put the money in a savings account, or any other type of account that you can easily access. By doing this, you will have money to use for emergencies, such as car repairs or unexpected medical bills.

A House

Buying a house is not always viewed as investing, even though most people would agree that a house is an investment. If you buy a house now with a 30-year mortgage, you will pay it off while you are in your 50s. Most people do not retire until they are in their late 60s or early 70s, so you will have 10 to 20 years to make money without having to make a house payment.

When you buy a house, be cautious with the one you choose. Make sure the house is located in an area that will help the house appreciate in value. Choose a house that will always be worth money and that will be marketable in the future if you decide to sell it. Owning a house is a great investment, simply because houses generally hold their value well over the years. In most cases, the value of homes appreciates, which means you will make money on your investment.

Your Retirement

The third important part of investing involves planning for your retirement. Although this may seem really far away right now, it's surprising how fast time goes by. If you start planning for your retirement right now, you will have a lot more time to prepare, and this is one of the key elements of a good investment plan.

Investing for retirement is something you can do in many ways, but using IRAs is one of the best options. An IRA is an investment that allows you to defer taxes. If you choose a traditional IRA, your contributions will lower your taxable income, which means you can save money on taxes right now.

IRAs are not the only option available, though. You could also invest in stocks, mutual funds, and other types of investments. As you start saving money each month, you will be surprised by how quickly your investments grow. By the time you retire, you will have a nice nest egg waiting for you.

If you want to start investing and planning for the future but are not sure where to begin, contact an investment service for more information or advice on what you should do.