For those of you in your twenties blessed with the notion to think about your retirement, exchange traded funds (ETFs) can help. Whether you are a college student or have recently entered the career world, the good news is, time is on your side as far as your retirement savings goes. The Mole, Money Magazine’s undercover financial planner, has three points that can help young investors gain financial freedom.

  1. Spend less than you make.
    Lucky you, you have the insight to even think about your financial future. However, that is half of the equation. You must limit your spending, for there is little that any financial planner can do for people who come to them later in life with maxed out credit cards and minimal savings. You must start now and resist urges to spend. Set a budget and understand what it is you can actually afford.
  2. Don’t worry about short-term investment risks.
    Time is on your side. Long-term investments are what you are aiming for, and the stock market has rarely lost ground over a 10-year time period. It always outpaces inflation over 30-year periods. Pay no attention to market plummets and fear.
  3. Don’t get seduced by "sexy" investments.
    Everyone wants to strike it rich with the next Google (GOOG), but the odds are low. Buy broad stock market index funds or ETFs with the lowest costs and highest tax efficiency. A total U.S. or international fund is perfect. Vanguard Total Stock Index ETF (VTI) features an expense ratio of 0.07% and Vanguard All-World Ex-US (VEU) has a 0.25% ratio. By keeping your costs low, your portfolio can grow more quickly by compounding what you get to keep.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.