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Initially a thought that may surface in your mind is that the trouble with investing in your twenties is not having a steady stream of revenue amidst fluctuating internship and job opportunities. Do not let that deter you and all the possibilities that exist to begin reaping the benefits of the financial market and let the compounding power work its natural power.
The decade after you graduate is one of the most incredibly productive times for most because you may be launching your career, starting a new business or finally have the chance to utilize any funds you stashed away.
To many millennial's surprise, in 2012 Fidelity found that the average IRA (Individual Retirement Account) for an owner aged 20-29 has an estimated saved $5,800.
Now if you find yourself hesitant to continue reading because you feel overwhelmed by the amount of money you wished you saved with each paycheck, do not fret. The good news is the best time to start investing is now. Here's a reason to start investing immediately, we are going to be responsible for funding our own retirement and if we do not start now, achieving our financial goals will be much more difficult as inflation rises.
A key advantage that millennials have over our parent’s generation is that retirement is still approximately 40 years away. Meaning that our dollars can be stretched to invest in stocks without as much hesitation of the long-term horizon (to an extent). To accompany that benefit is that even the smallest of investments will compound continuously.
Now exactly what should you be hunting and combing through stocks looking for? Be on the lookout for companies that:
- Have a good position in the market
- Have a fairly priced stock
- May pay some earnings out to shareholders (in from the dividends)
The purchasing and trading options below have been evaluated for their accessibility, affordability and easy-to-learn platform interfaces.
Robinhood: One of my personal favorites and free trading platform that I avidly utilize to purchase and monitor my stocks. Something to note is that they do not yet support bonds, mutual funds or preferred stocks.
“Robinhood started with the idea that a technology-driven brokerage could operate with significantly less overhead” (Robinhood Markets). Able to be downloaded right from the Apple App Store, Robinhood is an approved member of FINRA and SIPC, which protects securities of customers up to $500,000.
Personal Capital: Encompasses enhanced features and is a free application software aimed to assist investors to make smarter financial decisions. You are provided with an overview of all bank accounts, investments and credit cards. However, there is a 0.89% annual fee for users depositing $1 million or less (my apology millennials).
More established players like Fidelity, Charles Schwab and Vanguard have been lowering their prices and have began to appeal to new investors through offering more options. The key is to be vigilant of the transaction fees that can typically accompany stock purchases.
When I first began investing and using several different applications, I was concerned with how I was going to fund my accounts without a steady income. It seems to be a cliché in the finance world, but every dollar you save eventually accumulates overtime and can lead to long-term growth.
Acorns: Similar to Robinhood it incorporates a simplistic and micro-investing approach to begin accumulating funds to automatically invest. Acorns uses the functionality of investing the spare change from purchases you have made by rounding them to the next dollar and investing the difference.
Example, when you purchase a $3.24 coffee, it takes the remaining $0.76 to be automatically invested. Investing just $5 a day can accumulate to almost $2,000 annually. Additionally, while earning along the way, Acorns invests the received dividends that are paid out.
WHAT TO BUY
Now that you have planned and conceptualized about investing basics, what should you invest in?I recommend starting with individual interested stocks and ETFs.
Stocks: A type of security that signifies ownership in a corporation and represents a claim on part of that corporation’s earnings and assets (Investopedia). There are two types, common stock and preferred stock. Common stock entitles the owner of the stock to vote at shareholders meetings and to receive dividends. While preferred stock usually does not have voting rights, but has a higher claim on earnings and assets than common shares. For example, owners of preferred stock receive dividends before common stock-holders.
Exchange-Traded Funds (ETFs): Serve as an investment fund traded on stock exchanges, similar to stocks. An ETF holds assets including stocks, commodities and bonds. Think of it like a “basket” of numerous stocks.
If you are holding your purchases short-term for a source of revenue, a place to stash savings or if you think you have found the next tech giant Apple-esque company, I have laid out some choices of where to begin. The letters in the parenthesis of each company named is called their Ticker and is used to search on investing platforms.
[Current prices listed on May 29th at 7:30PM EDT.]
1. Universal Display Corporation (OLED): Developer and manufacturer of organic light emitting diode technologies that are utilized in the iPhone 8 and Samsung Galaxy S7/ S8. Price: $115.00 (Note: before you scoff at the price, May 1 2017 they closed at $89.90)
2. NVIDIA Corporation (NVDA): American technology company designing graphic processing units for gaming and professional markets, as well as units containing a system on a chip for the mobile computing and automotive market. Price: $141.84 (Note: once again, May 1 2017 they closed at $106.64)
3. EXACT Sciences Corporation (EXAS): A molecular diagnostics company with focus on the early detection and prevention of colorectal cancer. Price: $33.50
4. SPDR S&P 500 trust ETF (SPY): This ETF is designed to track the S&P 500. Price: $241.71
5. Apple (APPL): American multinational technology company that designs, develops, and sells consumer electronics, computer software and online services. Price: $153.61
6. Facebook (FB): Online social media and social networking service. Price: $152.13
7. TESLA (TSLA): American automaker, energy source company and solar panel manufacturer. Price: $325.14
8. Alphabet Inc Class A (GOOGL): American multinational conglomerate and the parent company of Google and several former Google subsidiaries. Price: $993.27
9. Netflix (NFLX): American entertainment company specializing in and providing streaming media, video-on-demand online and DVDs by mail. Price: $162.43
10. Advanced Micro Devices (AMD): An American multinational semiconductor company that develops computer processors and related technologies for business and consumer markets. Price: $11.00
*Our content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investments.
Images: Refinery29, Google Images