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The modern generation of young investors have come of age in the Information Era. Growing up in sync with the internet, they’ve witnessed more technological progression and access to knowledge than any preceding generation.
Young investors now have unprecedented access to investment education, a wide array of investment options, and the rise of social media influencers cultivating wealth-building communities, which makes this subject increasingly prevalent among youth.
Nevertheless, the investment landscape can appear quite daunting, particularly for young adults just embarking on this journey. Despite the inherent risks of investing, there are certain proven investment strategies that every young investor can implement to set the groundwork for financial prosperity:
Before delving into investments, it’s crucial to understand your objectives. Are you trying to amass funds for a home down payment? Or perhaps you’re aiming for early retirement? Maybe you’re aspiring to establish a business or start a family? Identifying your financial objectives can guide you to choose the most suitable investment strategy. Once your goals are clear, you can formulate an investment plan to reach them.
Initially, you might feel as if you don’t possess “sufficient” funds to invest. Beginning with a small investment and gradually expanding your portfolio is a wise approach. This allows you to navigate the investment realm and grow your expertise and confidence gradually, without the pressure of a large sum at risk.
Starting earlier affords you the benefit of compound returns. Compound returns accumulate when you reinvest your earnings, propelling your investments’ growth over time. The sooner you start investing, the more time your investments have to compound, culminating in substantial long-term growth.
You’ve probably come across the saying, ‘Don’t put all your eggs in one basket’. In investment terms, this means ‘Don’t tie up all your money in a single investment’. Spreading your investments across diverse asset classes is a crucial tactic that can mitigate portfolio risk and offer more steady returns.
Investments should generally be regarded as a long-term commitment, considering that markets cyclically fluctuate between growth, decline, and stagnation. This implies that you’ll likely witness a market crash at some point in your investment journey, which can instigate fear among investors.
It’s essential to maintain a level-headed perspective and avoid knee-jerk investment decisions. Often, during a market crash, the optimal strategy is to stay committed to your investment plan. Moreover, market corrections often offer excellent investment opportunities as markets tumble and asset prices fall. As Warren Buffet advised: “Be fearful when others are greedy and greedy when others are fearful”.
While investing might appear intimidating initially, incorporating these foundational strategies will lay the path towards success.
A financial adviser can assist in setting realistic financial goals, future planning, and making informed investment decisions to keep you on track towards sustainable wealth generation.
You needn’t traverse the financial world solo – let an adviser be your ally in financial success!
The information contained on this website has been provided as general advice only. The contents have been prepared without taking account of your personal objectives, financial situation or needs. You should, before you make any decision regarding any information, strategies or products mentioned on this website, consult your own financial adviser to consider whether that is appropriate having regard to your own objectives, financial situation and needs.