The post Best Ways to Invest Money Young by Jordan Schneir appeared first on Benzinga. Visit Benzinga to get more great content like this.
Ask two people why they invest and you’ll likely get two different answers, yet everyone’s reasons stem from one idea; to end with more than you started. This usually occurs over some period of time. Below are common reasons people invest money young.
Quick Look at the Best Ways to Invest Young:
- Stocks
- Government and Corporate Bonds
- Real Estate
- Peer-to-Peer Lending
- Savings Accounts and Certificates of Deposits (CDs)
- Education and Self-Development
Contents
Reasons to Invest
- Retirement: Adds to your ability to quit work and live off the gains later in life.
- Life events: Puts enough money together to pay for a wedding or starting a family.
- Personal development: Save for college and higher education.
- Housing: Bank enough money for a down payment.
- Wealth creation: Make money to increase your net worth.
- Provide for others: Invest to generate funds for charity.
- Avoid inflation: Use low-yield savings accounts to offset inflation.
Create a Plan
People often give Treasury bonds as gifts for newborns for college. Such a conservative investment guarantees the money and gain will be there when needed, but this strategy may not be right for someone trying to make enough to quit his job.
Your reason for investing creates the framework for an investment plan and considers the following:
Goals
- Goals should be as specific as possible.
- They answer how much and by when.
Risk profile
- An individual’s personality and goals define how much risk to accept.
- With a longer time horizon, you can take more risk now that will average out over time.
- Create a portfolio geared towards lower volatility if the thought of waking up one morning with your portfolio down 5% makes you uneasy,
Income vs expenses
- Financial plans look at inflows (income) and outflows (expenses).
- Expenses include ongoing items like food, housing and loan payments
- What remains after paying all your expenses can be used for investing.
Types of Investments
After you’ve created an investment plan, select your options. Investments fall on a scale that balances risk and return. Riskier stocks should provide bigger gains than safer ones. Stocks should provide better returns than bonds. The type of investments you choose balances these forces.
Stocks
- Partial ownership of a company.
- You share in the profits and losses along the way.
- Different stocks have different levels of risk.
- When companies go bankrupt, stockholders usually get nothing.
- Stocks can be easily bought and sold.
Best Stock Brokers
Interactive Brokers is a comprehensive trading platform that gives you access to a massive range of securities at affordable prices. You can buy assets from all around the world from the comfort of your home or office with access to over 150 global markets. Options, futures, forex and fund trading are also available, and most traders won’t pay a commission on any purchase or sale.
IBKR is geared primarily toward experienced traders and investors but now with the availability of free trades with IBKR Lite, casual traders can also acclimate to IBKR’s offerings.
Best For
- Access to international markets
- Active traders
- Detailed mobile app that makes trading simple
- Wide range of available account types and tradeable assets
- IB SmartRouting provides significant price improvement vs. industry
- Fractional trading allows investing regardless of share price
- Industry’s lowest margin rates
- Earn more by lending your fuly-paid shares
- Beginner investors might prefer a broker that offers a bit more hand-holding and educational resources
Magnifi is an intelligently designed marketplace that allows investors to access data-backed information about various investment opportunities. The company combines standard brokerage tools with artificial intelligence (AI) to promote financial competence. Magnifi distinguishes itself from the crowd by offering an AI-powered search feature and an AI-powered investment assistant. Magnifi offers a technology-forward platform that aims to promote confident and capable long-term financial investments.
Best For
- Long-term investors
- Individuals interested in personalized assistance
- New investors that are eager to learn how to start investing
- Access to an AI-powered investing assistant with a Magnifi Personal account
- Commission-free investing
- Over 15,000 possible investments
- Available mobile application
- Limited methods of communication with customer service
CenterPoint Securities is ideal for active traders who demand access to advanced tools and services. While investors and casual traders are likely to be content with the basic offerings of traditional online brokerages, active traders will benefit from CenterPoint’s suite of advanced trading tools. If you value execution quality, access to short inventory, advanced trading platforms, and accessible customer service, CenterPoint is an excellent choice.
Best For
- Intermediate to Advanced traders
- High-volume traders
- Momentum traders
- Short sellers
- Unrivaled access to short inventory
- Flexible order routing for improved executions
- Discounts for active traders
- Advanced platform with fast executions
- Reliable customer service
- Not designed for beginner or low-volume traders
Webull, founded in 2017, is a mobile app-based brokerage that features commission-free stock and exchange-traded fund (ETF) trading. It’s regulated by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).
Webull offers active traders technical indicators, economic calendars, ratings from research agencies, margin trading and short-selling. Webull’s trading platform is designed for intermediate and experienced traders, although beginning traders can also benefit.
Webull is widely considered one of the best Robinhood alternatives.
Best For
- Active traders
- Intermediate traders
- Advanced traders
- No account maintenance fees or software platform fees
- No charges to open and maintain an account
- Intuitive trading platform with technical and fundamental analysis tools
- Does not support trading in mutual funds, bonds or OTC stocks
This publicly listed discount broker, which is in existence for over four decades, is service-intensive, offering intuitive and powerful investment tools. Especially, with equity investing, a flat fee is charged, with the firm claiming that it charges no trade minimum, no data fees, and no platform fees. Though it is pricier than many other discount brokers, what tilts the scales in its favor is its well-rounded service offerings and the quality and value it offers its clients.
Best For
- Novice investors
- Retirement savers
- Day traders
- World-class trading platforms
- Detailed research reports and Education Center
- Assets ranging from stocks and ETFs to derivatives like futures and options
- Thinkorswim can be overwhelming to inexperienced traders
- Derivatives trading more costly than some competitors
- Expensive margin rates
Government and corporate bonds
- Guarantee of payment from a company or government.
- Failure to pay a bond results in default.
- Bondholders can force the issuer to sell assets to pay them back for their investment.
Real estate
- Ownership of residential or commercial land or buildings, including primary residences.
- Very illiquid market that can take weeks to months to buy or sell.
- Risk varies depending on the location and market cycle.
-NOTICE- Benzinga has been alerted that Diversyfund has suspended its monthly dividend. This review will be updated once we investigate these changes to the platform’s dividend payments.
DiversyFund isn’t your average crowdfunding platform. You’ll find that the company puts a twist on the traditional everyday crowdfunding platform, beyond anything you can find online with a simple Google search. You only have to look under DiversyFund’s skin one layer to surmise that DiversyFund is a conscientious developer and sponsor and helps hedge risk through improved vetting.
DiversyFund offers a multifamily real estate investment trust, the DiversyFund Growth REIT, and its main goals are to increase cash flow and resale value. It’ll automatically give you access to multi-million dollar real estate assets.
Best For
- Those looking for an alternative investment beyond stocks and bonds
- Individuals who aren’t sure they want to be landlords in the traditional sense
- Investors who aren’t accredited
- Only need to pony up $500 to get started
- Open to investors all over the world
- No expensive broker fees
- You’ll only be able to access “blind pool” investments, which means that you can’t opt out of specific properties
- There’s only one real investment option, the DiversyFund Growth REIT
Crowdstreet is an online real estate investment platform that lets investors choose from a wide range of real estate investment offerings to crowdfund. Crowdstreet investors are free to buy into managed funds, individual buildings or even build a bespoke investment portfolio that includes both kinds of deals.
CrowdStreet’s platform has a diverse range of property types, ranging from multifamily to office, industrial, self-storage and others.
Best For
- Accredited investors
- Long-term investors
- Investors looking to diversify from stocks
- User-friendly interface
- Diverse investment offerings
- Great investor resources
- Proven performance history
- Many offerings eligible for inclusion in self-directed IRA
- Accredited investors only
- Most offerings require a $25,000 minimum investment
Groundfloor is open to non-accredited investors and private individuals looking for active real estate alternative investment. Groundfloor has great volume with more than 10 investments.
Individuals with small portfolios will also like the low $10 minimum and 0 investor fees. However, most of the loans are given to house flippers, and there is a risk of borrowers defaulting on their loans.
Best For
- Non-accredited investors: It is a good option for non-accredited investors who want to invest in an individual capacity.
- Private investors with small portfolios: Groundfloor charges a relatively small premium of $10, which private investors with small portfolios find attractive.
- Active-investors: Groundfloor is also ideal for investors who want to actively maintain and control their real estate portfolio.
- Charges the lowest minimums in the industry
- 0 investor fees
- Open to non-accredited investors
- Offers no bankruptcy protection
- High rate of an uncured default
- Many loans are for judicial-only states
Mainvest allows people to invest in local small business with a minimum investment of only $100.
Best For
Streitwise is a unique online real estate investing platform that was designed to give investors, both big and small, an equal opportunity to invest in real estate. At its core, Streitwise is a real estate investment trust, but it’s one of the few online real estate investing platforms that is available to non-accredited investors.
Best For
- Investors looking to diversify
- Investors with less than $200k in annual income
- Passive traders
- Consistent quarterly dividends
- Low, transparent fees
- Low investment minimum
- Convenient and easy to use
- Limited offerings
Peer to peer lending
- Lending to individuals or businesses
- May not come with the same rights to force asset sales as bondholders
- Used by individuals to start businesses or lower high-interest payments
- Risk and return is evaluated on an individual deal basis.
Savings accounts and certificates of deposit (CDs)
- Money given to banks or financial institutions provides a small but guaranteed interest rate.
- Conservative investment that people use for emergency funds
- Easy-to-access and very liquid
- CDs may have a penalty for closing them early.
- Both may require a minimum balance.
Education and self-development
- Use savings to pay for school and training.
- You take classes and develop skills with the expectation that it will lead to better jobs in the future.
Choose a Preferred Platform
There are several digital financial platforms you can try, stock brokers to review, banks and many more. If you’re just getting started, you can try a platform like MoneyLion when you need to build your credit, invest, manage your money and learn more about your finances.
Learn more about stocks. Check out Benzinga’s article How to Buy Stocks for Beginners.
Try Revolut
Revolut is a unique money app that brings several financial services into one package. When you download the Revolut app, you gain access to a service that:
- Lets you pay and get paid any time around the world
- Transfer money between apps
- Invest in stocks and other assets
- Exchange currency
- Get a prepaid debit card in multiple countries
- Travel with less stress
- Budget and manage your finances
Using Revolut makes it much easier to manage your money instead of using several different apps and trying to bring them together.
Looking for a powerful financial tool that can help you manage and improve your finances? Revolut is a digital money app launched in 2015 that allows you to make instant international money transfers and spend in 140+ countries at excellent exchange rates. Revolut is the smart way to spend, send, manage and invest money – all in one app.
Designed with the needs of international students, travelers, and families in mind, Revolut is a comprehensive money management app that offers a wide range of features and benefits to meet your needs.
Best For
- Globally active consumers and businesses who need to transfer, send, and receive money across borders
- Travelers who want travel benefits and easy access to cash internationally
- Investors who want to stay updated with the market and invest without hidden fees
- Fast and seamless online international money transfers
- Spend and save money in 25 plus currencies
- Travel features such no charge lounge access and access to excellent exchange rates
- Money transfer between accounts
- International prepaid debit card
- Convenient hotel booking and no charge lounge access
- Excellent cashback offers from popular brands
- No physical branches
- Customer service chat support is limited at times
Final Thoughts on Investing Young
Reducing your expenses is one of the best ways to invest. People often forget to look at the way they live as an opportunity to make money. Spending $300 to add insulation into your home could provide a better return than the stock market. Paying off your credit card that charges 20% interest will get you a better return than most stocks.
Is it smart to invest money young?
When you invests money young, you have more time to build your investments and grow your wealth.
How can I invest money young?
One of the ways you can invest money young is to reduce your current expenses and put the money towad investments.
How can I set goals for investing my money while I’m young?
For the best results, you should create a detailed plan that will help you invest your money wisely.
The post Best Ways to Invest Money Young by Jordan Schneir appeared first on Benzinga. Visit Benzinga to get more great content like this.
