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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David Rappaport, CFP®