Start investing as soon as you can and you will enjoy the magical power of compounding.
Here are the investments you should make during each important decade of your life:
How you should invest in your 20s:🤵🏻
At this age you should be looking to invest in yourself, a better education + career. You should also be taking advantage of every Tax efficient savings vehicles such as your personal ISA allowance. You can use this to invest in stocks and shares ISAs or cash ISAs. If you are buying a home then the Lifetime ISA or Help to Buy ISA.
How you should invest in your 30s & 40s:👲🏻
If you’re in your 30’s you have 30 years or more to profit from the investment markets before you’re likely to retire. The temporary declines in stock prices won’t hurt you much because you have years to recoup any losses. So, if your stomach can handle the stock price volatility, now’s the time to invest aggressively. You should also begin to invest in your pension and retirement funds.
Favour stocks over Bonds:
Over the long term, stock investments have beaten those of bonds and cash. From 1928 through 2016, the S&P 500 has returned an annual average of 9.53 percent, the 10-year Treasury bond earned 4.91 percent per year and the 3-month Treasury bill (a cash proxy) yielded 3.42 percent. While bonds are more stable, you won’t beat stocks if you’re looking to multiply your money over the long-term.
How you should invest in your 50s:🧔🏻
Invest in real estate directly or through reits. Plan Your Additional Income Streams.
Investigate creating investing income streams. Shift some of your investments into higher dividend paying stock and bond funds. Consider REITs with juicier dividend payments as well. That way, you can structure your portfolio to throw off some spending money in retirement whilst maintianing a balance between high rsk investments and passive income investments.
Ultimately, how you invest in each decade is dictated by the progress you’re making towards your financial goals and your asset allocation. Start saving and investing as early as possible to secure your financial tomorrow. In some case this all starts with your finacial education.