Welcome back to WhiteBoard finance.
My name is Marko and I'm here to help you master your money and build your wealth.
Today we're talking about how to invest money in your 20s.
The 20s are probably the best time in your life to live it up.
You just graduated college or you just got a full time job.
You don't have that much responsibility compared to how much income you're bringing in.
And now you have a lot more freedom.
This is like college on steroids almost.
However if you do things right during your 20s you're going to be able to set yourself
up financially for life if you just develop some good habits.
So in this video I'm going to teach you how to invest money in your 20s.
I want to break this down into seven easy steps for you to follow.
Number one is take advantage of compound interest.
When you're in your 20s you probably think like you have so much time or so many decades
to be able to save.
So why start now.
Right.
That's because you have the power of time on your side.
You have something called compound interest which Albert Einstein dubbed the eighth wonder
of the world.
Here's a great example.
Let's say you invest 300 dollars per month starting at age 20 and don't stop until you're
60 years old.
If you managed 8 percent return during that time you would have more than one million
dollars in that account alone.
Now let's say you waited until you were 30 to get started.
By the time you reach 60 years old you would only have four hundred and forty thousand
dollars in your account.
Those first 10 years you missed out on it would cost you more than five hundred and
fifty thousand dollars in returns.
Even though you only skipped 36 grand and 10 years of deposits.
The way compound interest works is that it's the interest that you accrue when the interest
you earn on your savings or investments begins to compound on itself.
So think of it like a wave or a tsunami getting bigger.
The water builds on itself until it gets huge or until you retire or until it destroys a
small city off the coast of Thailand.
Number two realize that money is a tool so use it as a tool to create the lifestyle you
want instead of using it as something that's just going to pay your bills and help you
get to the next week or the next paycheck trading time for money and a job is probably
not the way that most of us want to live our lives.
So while you're in your 20s and you don't have as much responsibility think about using
your money and have that work for you.
You need to create assets that create money for you every month or every week.
So for example take a look at a dividend stock or a rental property if you want to use the
example of a dividend stock you can take a three percent yield and multiply that by let's
say one hundred thousand dollars over the course of saving up that's going to net you
3000 dollars throughout the year.
That's an extra 3000 dollars that you just created out of doing nothing literally passive
income.
And if you get to the point where you earn a million dollars and put that into that over
the course of time you're going to be getting back.
Thirty thousand dollars a year.
That's actually a full time income for some people and you haven't done anything but invest.
So that's your money working for you.
So realize that money is a tool.
Number three ramp up your savings as you age.
So the 20s although you don't have that much responsibility you're trying to save up for
a lot of things whether is travel a house a car you may even have a newborn on the way.
You need to be able to pay for all those things and still save.
So you want to live your life and have a good balance as well financially.
A lot of people they say you know start with 1 percent a year when you're 20 years old.
So you save 1 percent of your income when you're 20.
So by the time you're 30 years old you're saving 30 percent of your income.
I think that number is a little bit too low to be honest with you.
And I think the more you save earlier the more it's going to compound over time.
So I would recommend starting saving your gross salary or gross income at 5 percent
and then increasing that by 1 percent per year.
So by the time you get into your 30s you're going to be at 15 percent of savings.
This isn't a help you in the long run.
So by the time you reach your 30s or 40s you may be getting pay raises or bonuses.
You're not even miss that lifestyle and you're still going to be saving up that money.
And again you're going to be living the same way as you already are.
So you're not sacrificing lifestyle for savings.
Number four ignore all the Joneses in your life and the Kurdish regions and pro athletes
and rappers and all that stuff.
So everyone likes to live like that because they see it on TV.
But at the end of the day there's no substance to the lifestyle material things are most
likely not going to keep you happy they're just going to be a bandaid over a deeper issue.
You need to enjoy things like Family Health time.
Those are things that you can't pay for.
So stop trying to keep up with the Joneses because the Joneses are broke.
Everybody has different personalities tastes you know risk tolerance things like that and
you need to account for that when it comes to your personal lifestyle.
Again that's why it's called Personal Finance.
Number five Invest in yourself.
So investing in yourself whether through books or education is probably the number one investment
that you can make.
My mom always said they can take away material things from you but they can't take away what's
in your head.
And I agree with you 100 percent.
So read as many books as you can when it comes to finance self development things like that.
Forget about the cheesy books that have no substance they're all just filler that make
you feel good you need to get books that have actionable plans.
The books that I recommend are thinking Grow Rich by Napoleon Hill The Intelligent Investor
by Benjamin Graham and also the Millionaire Next Door by Thomas Jay Stanley.
These are three books that I've read early on in my life and they've helped me greatly.
Number Six automate your investments and have them work for you.
So that way when you pay yourself first you don't even see that money leaving your account.
So the way I set up my finances is I have a capital one account online and I also have
my own checking account line so I get paid through work or investments or income into
my checking account and every week I have certain funds that go into the capital one
account.
So I have a travel fund a retirement fund a house fund an emergency fund and also a
car fund.
So when you start paying attention to these over time you log back into Capital One you
say wow you know I have X amount of dollars saved and all these different funds.
So for example I plan on going to Europe later this year in 2018 and I actually have money
saved up in my travel fund without even having to think about it.
All I got to do is transfer that money that I've been saving up throughout the year.
It goes into my checking account everything is paid for and I don't even miss that money.
The point is is that you don't have the opportunity to spend it if it's not in front of you.
And that way you'll never miss it.
Number seven set up a retirement account.
Please set up a 401k set setup a Roth IRA.
These are not negotiable.
This is not optional you need to absolutely do this.
You need to take advantage of a 401k that your employer matches if they match.
So I would recommend at the minimum contribute whatever the employer matches.
So if they match 4 percent at 100 percent contribute at least 4 percent.
Also open up a Roth IRA.
All you have to do is put away three to four hundred dollars per month and you can go back
to the example earlier in this video you will be a millionaire by the time you retire.
Period.
That is 100 percent guaranteed.
I mean I don't want to make guarantees that it could be world catastrophe and famine and
all that stuff.
But let's be honest here.
That's most likely not going to happen.
So please max out your Roth IRA and at least contribute the minimum to your 401K.
So if you want to invest money in your 20s these are the best seven ways to do so.
I recommend doing this because it will set up a strong foundation for the rest of your
life and you can be able to provide for the rest of your family tree this way whether
it's your parents whether it's your future family whether it's your significant other.
This is a good blueprint to a solid financial foundation.
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Thank you so much and have a prosperous day.
Hey how should people invest in their 20s.
For that investment taught me any tips and tricks.
How should the audition behave.
It's like my wife now.
All right thank you Dr..