Did you know that 1 in 3 working Americans are millennials? According to Pew Research Center, they account for more 35% of the US labor force. As of 2017, 56 million American millennials aged between 21 years and 36 years were either looking for work or working.
With a job or any other income generating venture, comes the financial responsibility of making sure your money works for you. Undertaking serious money management responsibilities today will help to set a solid financial foundation
Want to grow your financial portfolio and enjoy your retirement as well?
It’s high time for you to invest.
Here are the top 3 investments for millennials.
Purchasing a Home
A vast majority of millennials have been swarmed with the following investment advice – avoid high interest credit cards, save early, don’t purchase stuff you don’t need, take advantage of retirement savings plan and buy a home.
Financial advisors have concluded that buying a home as a millennial is an important investment and the right step towards building a retirement nest egg. Benefits of buying your first home as a millennial includes building equity, forced savings, tax savings and hedge against inflation.
Despite the benefits of owning a home, there are circumstances that may counter this. For instance, if you are planning to reside in a certain area for less than 5 years, then the best option for you is to rent. Why? It’s cheaper and integrates well with your short term goals. According to financial experts, it takes at least 7 years for one to get enough equity in a home.
Purchasing your first home can be overwhelming and since its one of the biggest investment decision, it’s wise to take the right steps.
Retirement Savings Plan
In a survey carried out by Ipsos, Earnest and Amino, it was found out that 31% of millennials are contributing to a retirement account. From the same survey, researchers found that 46% of millennials would start scrambling just to cover their bills if their next paycheck was withheld while 69% are not saving for retirement.
If you are among the 69%, you need to know that retirement is not too far off. A vast majority of financial experts have cautioned that if millennials don’t change their habits in regards to saving for retirement, they will miss a vital opportunity.
Related: The Reality of a Million Dollar Retirement
Taking too long to start saving for retirement or learning how to invest in stocks means that one will fall farther behind and they will also miss out on the compound interest. This will surely affect a person’s wealth. What a vast majority of millennials don’t know is that time is their greatest asset when it comes to retirement savings plan.
According to financial experts, millennials aged 21 years today have at least 40 years before retiring. This is a great opportunity for them if they were to invest in stock, real estate and probably cryptocurrency futures. In the past decade, the three assets above have experienced explosive growth especially cryptocurrencies. It is estimated that they will continue to grow as time goes by.
By investing towards your retirement savings today, you will be in a position to increase your purchasing power. Apart from the assets above, there are other retirement plans you can take advantage of such as Traditional IRA, Roth IRA, Simplified Employee IRA, Simple IRAs and Employee sponsored plans.
Invest in Knowledge
“Knowledge is Power” is an age old quote that has transcended time and humanity. For starters, without knowledge, humanity would never have advanced in terms of science, medicine and technology. Right now, we would all be living in caves, hunting and gathering for food.
Knowledge is what separates people from animals apart from their physical form. Now that you know knowledge drives human life, gaining some is of paramount importance. This calls for schooling specifically in a college. A vast majority of millennials may or have opted for expensive student loans to fund their high education.
With a little research, they would have discovered that there are a few savings plan that are actually very affordable. One good example is the 529 plan.
529 Plan – This plan is designed to fund your higher education or any other investment. A vast majority of US states have this plan. Taking advantage of it means that your monies will grow tax free in the plan until such a time when the funds can be withdrawn.
Related: Financial Technology Isn’t Just for Millennials
The 529 plan is divided into two:
Savings plans – similar to IRAs, the funds can be used to fund other investments
Prepaid tuition plans – can be used by the plan holder to fund the beneficiary’s higher education
Final Thoughts on 3 Investments for Millennials
If you want to secure your financial status today and in the future, now is the time to take action. Instead of spending your hard earned monies vacationing frequently on exotic islands around the globe, invest your money in real estate, retirement savings and in your knowledge. Once you retire, you can plan and vacation on any exotic island you desire now that you are financially secure.
This article has been republished with permission from Modest Money.