When I was at your age, I went to a graduate school with a major in finance. Having just moved to a country that holds great opportunities, everything also seemed so complex and confusing, New language, culture and social system while completing a master degree and deciding on a career that could set me up for the entire life. Looking back, I wish I knew some of the things I know now.
I could not tell you how many times I wished there was a mentor who could guide me through on some of the options or directions. Have I knew some of the things I learned in hard way, I could have saved much time and ramping curve to bring me faster to where I am today. Now that I am a middle age woman with two beautiful children, I would like to say that I am still on that learning curve. However, my desire of helping other women and young generation is stronger than ever. The more we learned about life, the more we are equipped to share.
Because of my background and the places I have worked, I have become very interested in financial markets. I have gone through many practices like most investors. Of all the things I’ve learned, it is that discipline and constant learning desire are essential ingredients to the investment success. But above and beyond, there are some practical tips I’ve picked up as I’ve coped with woman’s lot: too little money, too little time, children education, jobs I liked and hated… I’ve made plenty of mistakes and there are lots of things I’d do differently if I had known better. Things listed here are an attempt to help my children or other Millennials building financial confidence:
Start as early as you can
Think about it? what is your biggest advantages comparing to the rest of the world? Your ample time left in your life. You are young and have no obligation yet. Your parents are more than likely still want to help you and support your finance. Time equals to opportunity. Invest in 401K as soon you have an employer who offers it. Use Retirement account if there is no 401K, regularly save cash to your saving/investment account. The main reason I want to emphasize this point is, when you are young, very likely you don’t have financial obligation yet. You don’t need to worry about children education, your spouse situation, your mortgage. You are more free to move to a place as you desire. You have less cash needs and can bear higher risk in your investment, which potentially brings higher returns. However, no other financial obligation could also bring in a mentality that you don’t need to save much. By 2019, your are more than likely somewhere 25 to 35 years old. It is on your radar that your responsibility will come very soon to your life.
Make sure that you continue to put savings into your investment on a regular basis and stick to the principal. Chances are, if you leave cash at hand without investment, it is more likely you will spend it on something that is not a necessity for you, like party or luxury goods.
Invest in equity before consumption items
Typical example would be house is an equity item and car is consumption item. While it may make you look flashy in a luxury car, you are surely not going to get any financial return out it. The more expensive the car is, the higher cash outflow to maintain it. On the other hand, if you invest in an equity item like house and know that you will live in it at least for a few years, chances are you will get some return out of it. Of course we want to make sure we don’t purchase house in a bubble market and make a good educated investment to it. Such investment also help to balance and diversity your overall portfolio like stocks.
Investment does not have to be big
You can start with small. You might not think it matters, but it does. Over time you will learn tons of experience in managing your investment pool and snowball effect will come when you feel much more seasoned in investment world.
Never stop learning
Read books and talk to other experienced investors, read blogs, get educated each day and feel the market beat. There was a survey to top richest people and they have one thing in common: learning something each day, mostly through reading. I am always amazed by books. Each outstanding book is the work after authors’ years of experience, research and reflections. What can be better education than getting such advice in such a cheap price.
Never forget tax impact to your investment. It can make or break your investment if you are not careful. Read my blog ” Things you can start doing right away to help building your wealth” and why I recommend to use Roth IRA.
All in all, if you simply start making investment with discipline, learn more each day on factors impacting your investment, it will be a tool you can benefit lifetime. Don’t get obsessed by getting rich. The bottom line is that you invest to have a better life. Be generous and keep peaceful mind can enrich your life in a pleasantly surprising way.