- How's it going today, guys?
I hope you're having a fantastic day.
So in this video here we're going to be talking about
how to invest in your 20s.
Now the way I look at it is this,
there are two potential things out there
that you could be investing.
First of all, you could be investing your time
and second of all, you could be investing your money.
I was about to make this a very long video
but I decided to break it up into two different parts.
So the first part here is going to be
how to invest your money in your 20s.
And the second part is going to be,
how to invest your time in your 20s.
And so if you guys are watching this video today,
I'll be uploading that video tomorrow or the next day,
but if you're watching this down the road,
I will link that video up in the description
and also at the end of this video.
That goes into more details about how I feel
you should be investing your time in your 20s.
Now in case you guys are not familiar with who I am.
I have been pretty much obsessed with personal finance
for the last couple of years.
And that largely came from
looking at people around me, my peers, people my age
and even a little bit above
making terrible financial decisions.
And I believe that these five things here
will really set you up for success in your 20s
if you get started doing these things with your money.
And even if you take one or two of these things,
I think it will put you leaps and bounds ahead of your peers
and people around you in terms of your level of success
and also just being financially well-off
and just being comfortable knowing
that you have enough money
and that you are not overextended.
So I'm gonna go ahead and cover the five things
that I recommend you should do in your 20s
investing your money
and the five things that you should not do
and hopefully that gives you a good idea
of what you should be doing with your money.
So the number one thing I recommend doing with your money
is to be investing in your skills and your education.
Now am I saying that you have to go out there
and get a college degree
and go into a massive amount of debt, absolutely not.
In fact, I don't even recommend really going to school
or going to college for that four year degree
or even that master's degree.
I've talked about before on this channel
how you can get a job,
working doing skilled trades,
you could go and do an apprenticeship.
Or go to some kind of trade school
and spend a lot less money
and come out making $70,000 or $80,000 a year.
So I actually know this some experience.
I got a two-year degree in electrical construction,
worked for the power utility
and I was surrounded by people
who were making $80,000, $90,000 a year,
a $100,000 at the top level
having a two-year degree in a skilled trade.
So I think skilled trades are a great way to go here.
But the thing that I'm getting at here is that
no investment is going to have as great of an ROI
as an investment in yourself.
And what I want to do to compare this here is,
let's say you have a high school degree
and you're able to make $35,000 per year.
But if you invested two years of your time
and invested some money into learning a skilled trade
or may be even less time, you could double that,
you could make $70,000 per year.
And I don't care if you invested in Bitcoin early on
or if you were investing in some stock
that had just gone public,
you're not going to get as great of a return
as you will as doing 30 to 40 years working a job
making $70,000 versus $35,000 a year.
So the very first thing you should be doing with your money,
invest in your skills, invest in your education
and make the highest salary that you can
that's going to allow you to divert more of that money,
your positive cash flow into your investing account
or towards the down payment at your house.
The very first thing you need to do
is have as much income coming in as possible
and the easiest way to do that
is to maximize your level of skills
and invest in your own education.
The second thing I would recommend
doing with your money besides that,
if you have already invested in your education,
you're making good money, is invest in a side hustle
or invest in a business that you're going to start yourself.
That's the second best way
to get the highest return on investment of your capital,
and I'm gonna go ahead and use myself as an example.
So like I said I used to work that job,
I used to work for the power utility,
I was working in the skilled trades.
And I had this idea of starting this YouTube channel
on the side of doing this you know entrepreneurship,
personal finance, stock market related channel.
And I did have some costs incurred with that,
I spent about a thousand dollars on a high quality camera,
on some lighting, on a whiteboard.
And my older videos were a lot lower in terms of quality
and you know the production value,
but I spent a thousand dollars to get up and rolling.
And from that YouTube channel alone in 2017
I made over $100,000.
So the ROI on that $100,000 investment
was like a hundred times ROI.
I made a hundred times my investment in one year
on the equipment involved in starting my YouTube channel.
Now yes, I put a massive amount of time into that.
I put hundreds, if not thousands of hours
into my YouTube channel last year,
but that investment of my capital was a very good investment
because I had such a great ROI
on that investment in my side hustle.
So that's the second place I'd recommend putting your money.
If you have extra time, you want to have a side business,
a side hustle.
Invest some money in a side hustle.
Maybe you want to start an online store,
maybe you want to start a blog
and you're gonna have to pay some money to have a website
or to have a computer to do all of this,
that's where you're gonna see the second best ROI
is by investing in a side hustle
or investing in your own business.
The third thing I would do with your money
assuming that you are employed,
is investing in some kind of retirement account.
Now this is very simple to understand here
what you should be doing with your money.
First of all, assuming that you are employed
and you have an employee sponsored 401(k),
you should be maximizing your contributions
up until the level that your employer will match.
So let's say for example,
your employer would match 50% up to 3%,
meaning if you contribute 6%
of your pre-tax income to a 401(k)
they'll give you another 3% for free,
that is what you should be doing.
If you are not taking advantage of that
matching that your employer does,
you are literally throwing money out the window.
So the very first thing you do
is you maximize your contributions
up until what your employer will allow you to do.
After you do that,
you're going to want to maximize your contributions
to a Roth IRA.
And for most people that's $5,500 per year,
that is money that can grow tax-free
and it's going to keep you tax sheltered
with those investments.
And any surplus beyond that,
that's what you're going to divert to your brokerage account
where you're going to be picking your own investments,
maybe put it in some ETFs,
maybe you want to invest in some individual stocks as well.
But that is the basic sequence of events
of what you should be investing in
and what order you do it.
You maximize your contributions to the 401(k)
up until what your employer will match,
then you put your maximum contributions into your Roth IRA
and then you put the rest
into your individual brokerage account,
and that alone is going to set you up
to be a multi-millionaire
by the time you reach retirement age.
Now the fourth way that you should invest your money in 20s
is by buying a two-family piece of real estate.
Now if you're ambitious and you want to buy
a three family or a four family,
that's a great option as well if you want to have
multiple units of real estate providing cash flow for you.
But at the bare minimum,
I would recommend that every young person buys
at least a two-family piece of real estate.
Now why would you do something like this?
The reason why you would do this is because
you are going to be an owner-occupant
of that piece of real estate.
You're going to live in one of those units
and you're gonna rent the other unit out to your tenant.
And in the process you're going to drastically reduce
your housing expenses by halving
the amount they're paying you in rent offset your mortgage.
So let's go ahead and go over an example of this here.
Let's say you have a two family piece of real estate
that you purchased.
In between your mortgage and your escrow taxes,
you're paying $1,500 a month for this piece of real estate.
Now maybe you could get a single-family house
and only be paying $1,200
but you're paying $1,500 for a two-family.
But what you don't realize is that,
you can rent out that extra unit for $1,000 a month
and then when you take your $1,500 mortgage
and subtract that $1,000,
you're effectively paying $500 a month for housing expenses
which is a lot less than you would pay
if you had a single family piece of real estate.
And that alone is going to be hundreds of dollars
that you can be putting into your savings account,
funneling in towards your retirement account
or your investing accounts.
And that alone is going to give you
so much more positive cash flow
and so much extra cash surplus
than your peers who are going to go out
and buy a single-family home.
So that is the fourth recommendation I have for you.
Buy a two-family piece of real estate, be an owner-occupant
and supplement your income by having that rental income
and lowering your housing costs.
And then the fifth and final way I would invest your money
if you've done all these things already,
and this you might even want to do before you funnel money
into your retirement accounts
is to reach the zero dollar line.
Now a lot of us are fortunate enough
that we're already above the zero dollar line.
And that simply means that you have more money
than you have debt.
Or you have zero dollars in debt
and you have money in the bank or you have assets.
And this right here is an unbelievable statistic
that I want to share with you.
But if you owe nothing to anybody,
if you have zero dollars in debt
and $10 dollars in your pocket,
you are richer than 15%
of the American households out there.
So what that means is that 15% of American households
own less than nothing.
They have no money and they owe money to other people,
they have a negative net worth.
And if you have a $10 net worth
of having zero dollars in debt and $10 in your pocket,
you're better off than 15% of households out there.
So if you haven't reached that zero dollar line
where you'll have zero dollars in debt.
Maybe it's student loans, maybe it's a car payment,
maybe it's some kind of store credit card
that you were irresponsible with.
The next thing I would do with your money is be debt free.
Be debt free in your 20s
and you're gonna be so much better off
in your 30s, in your 40s, in your 50s
and most importantly, stay out of debt,
don't get back into debt.
If you have that extra cash surplus,
you're going to be building up an emergency fund for you
to eliminate that need for debt.
And you're gonna be investing your money in the stock market
and you're gonna be investing in your retirement accounts
and you're gonna be so much better off by being debt-free.
So the fifth thing I recommend,
get to the zero dollar line, if you're not there already.
And if you already have zero dollars in debt,
then you should be very happy
because you are in a great situation
and you are better off than most people are in America.
Okay, so now I want to quickly cover
the five things that you should not invest your money in
in your 20s or ever for that matter.
And number one is investing in a depreciating asset.
Now yes, you are going to have to buy a car
and it is a depreciating asset,
but don't go crazy buying some $50,000 or $60,000 car
to impress your parents or impress your friends.
I know so many people
that have made this mistake in their 20s.
They buy the flashy car,
they invest in a depreciating asset,
they end up upside down in their car payment
and then they're paying $700 or $800 a month for a car.
Don't do it.
It is one of the biggest mistakes you can make
in your 20s with your money.
Second of all, do not invest in a college education
simply to impress your friends or your family.
There's expectations set out there.
I certainly had those for me as well,
a lot of my family members wanted me to go out there
and get that four-year college degree
and to go to some Ivy League school
and I didn't want to do that.
That wasn't gonna be my life.
I wasn't gonna go into massive amounts of debt
to impress my family.
I would not recommend doing this with your money either.
Do not invest your money in a college education
unless you plan on actually using it.
Third of all, do not be investing in high-risk avenues
like some kind of obscure cryptocurrency
or some kind of penny stock,
it's just going to be a learning experience for you.
And if you do insist on doing this,
only invest what you are willing to lose
in these types of investments
or as I call them, speculations.
The fourth thing you should not do what your money
is spend money renting for all of your 20s.
There are people that end up spending their entire 20s
renting from somebody else, building zero dollars in equity
and flushing money down the toilet.
Do not spend all of your 20s renting from somebody else.
Own real estate by the time you're 30
and do it earlier on in your 20s if you can.
And better yet own a two-family piece of real estate
and let that other unit offset
some of your housing expenses.
And then fifth and finally,
do not invest or spend your money
on any kind of materialistic relationships.
Whether this is a boyfriend or a girlfriend
or friends that simply encourage you to spend money,
you need to make sure these people
are not involved in your life.
They're going to seep money away from you
and they're gonna seep away your happiness
and these are just not the kinds of people
you want to be spending your time with.
But anyways guys, that's gonna wrap up this video.
Thank you so much for watching.
Make sure you check out the follow-up video I'm going to do
on how to invest your time in your 20s.
But thank you guys so much for watching
and I will see you in the next video.
If you are interested in learning more
about investing in the stock market,
I've created a free course just for you.
The link is in the description below.
Here are a few other videos you might enjoy as well.
(melodious instrumental music)