The Twenty Something Investor

Are you in your twenties?  A recent college grad? What a great time to start investing!

Don’t get caught up in the current news about the economy. You have time on your side. Lots of time.

As a twenty something investor, focus on what you can control.

• Save as much as you can in your retirement plan at work. Target date funds are a terrific investment option. Pick a target date fund based on your future retirement date. Target date funds hold more in stocks during your early working life, and gradually become more conservative as you approach retirement.                                                                                                                                                               
• Start a rainy day fund, with the goal of having 6 months of living expenses covered if you find yourself in a tough spot, such as losing a job. Keep these funds in cash – in money market funds or bank savings accounts. Cash accounts are also appropriate if you are saving for a down payment on a home or a significant upcoming purchase.                                                                                                                                                                                                                                                    
• Next step – invest for the longer-term by setting up an investment account at a firm like Charles Schwab. Diversification is the best strategy to avoid a big mistake. While investing in only a few individual stocks may seem like fun, it adds risk. Diversified index or market-tracking mutual funds or ETFs should form the foundation of your long-term portfolio.                                                                                                                                                                                            
• Don’t wait to get started. Even putting aside a small amount of each paycheck creates discipline. Start now.                                                                                                    
• Create an investment plan that fits your needs – don’t worry about what everyone else is doing.                                                                                                          
• Perhaps the most important thing you can control - live within your means.  

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