I’m Young, Where Should I Invest My Money?

My Answer: You should start buying stocks. Plain and simple.

1) As I write this, interest rates are below 1%. They have been close to zero % for at least three years now. I don’t know about you but I don’t like loaning my money for free and that is basically what you are doing if you “invest” in bank certificate of deposits or Treasury bills. Yes, the money is safe, but you get so little in return that I’d hardly call it investing.

2) Real estate is also an option. But it has had a rough patch since about 2008 and many property values have declined, some significantly. Real estate also requires maintenance or renting it out and you have to pay property taxes on it as well. Some people have done well owning it but that kind of investment was never my thing.

3) Gold and silver are always popular but if you have looked at gold prices lately, you will see they are way down. Gold can definitely be part of anyones investment portfolio but shouldn’t be the whole thing.

So if you are thinking “where should I invest my money?”, that leaves the stock market.

No matter what you’ve heard, the stock market is your best bet to grow your money and that is especially true if you are in your 20 or 30’s. Actually, its true even in your 40’s. The reason? Because you have time on your side. Time means everything when it comes to buying stocks. Take a look below at the Dow chart for the last 40 years:

Stock market history

Yes, there have been some lean years in there and periods of up to 6 years where you might have lost money. But If you didn’t panic and held on to your stocks, in every case you would have made your money back, and then some.

The stock market is for investors who have time and are willing to wait out the down periods. That is so important I can’t stress it enough. You should buy stocks with money you don’t and won’t need for many years. Typically that would mean money that is earmarked for retirement. Suck it up and save money when you are young, invest it in stocks throughout your life, and be happy later on when you have more money than your friends who never were that disciplined. Its really up to you and anyone can do it. 

The Government (Social Security) Won’t Pay All Your Retirement Expenses

When I retire I want to have the money to go out and be able to do things I have always wanted to do. For me that means play more golf, travel, live in a house that is paid for, and not have to ever worry about how much money I have and whether I will be able to afford something. There is NO WAY I would be able to do that with just Social Security coming in. Luckily, I think I am well on my way to my goal and it is because of the money I have saved and invested in stocks. If I ever get any Social Security (they keep raising the eligibility age so I might not), it will just be icing on the cake. 

Did you know that Social Security was never set up with the intent t to pay for your whole retirement? It was only meant to SUPPLEMENT it! That means you need to save and invest on your own so that you can do the things you want to do when it comes time to retire. It is really up to you and if you don’t save and invest wisely you will be sorry later on.

But Isn’t The Stock Market Too Risky?

Don’t be fooled by the Occupy Wall Street gang. That was a bunch of crybaby losers who were mostly unemployed and mad at the world because things haven’t been given to them like they wanted. 

Don’t be fooled by people who tell you that stocks are rigged or that they are manipulated by insiders. Yes, occasionally someone might try to cheat the market but those instances are rare. It is highly regulated and in my opinion very safe for individual investors. 

Don’t get fooled by an over hyped stock like Facebook going right down at the IPO. It came back right? If you didn’t panic and held on it came back…..and that is almost always the key. Buy and hold still works in most cases. If you have the time which you do when you are young. 

Start Buying Stocks Slowly

I’m absolutely convinced that EVERYONE would be better off if they learned how to buy and sell stocks. Never having any money in the stock market is a big time lost opportunity. Its like learning another language: most everyone agrees that knowing several languages is best right? Learn the language of stocks and you WILL be better off. 

Even if you believe your risk tolerance is low (you are scared of losing your money), try putting some money in just to test the waters. Buying stocks for the first time can be a bit scary if you know nothing about it but the potential returns in stocks are so much greater than anywhere else that you owe it to yourself to at minimum, give it a try.

If you do give it a go, you need to commit to keeping it in the market even if your stock(s) go down. Too many people panic, take their money out at a loss, and never put it back in. They bail too soon because they are scared. Long term investing works if you give your stocks a chance to recover from any down periods. Time is on your side if you are wiling to commit and learn. 

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