Planning To Start Investing? Here Are Two Essential Tips To Follow Beforehand
Millennials tend to be more informed than any generation before them and know that they need to start planning for their retirement straight away. A good portion of millennials sees themselves becoming millionaires in the near future which fuels their desire to make huge investments in companies and funds which they think will end up getting them the most returns.
However, what a lot of young people don’t realize is that making short-term investments isn’t the way to go if they want a financially secure future in the days ahead. In fact, that’s almost the opposite of what they should be doing in their 20s because that’s the time when they tend to be drowning in debts. If you’re a millennial and want to start investing money in your future, here are two important tips from a financial planning advisor that you might consider worthwhile as they might end up being the difference between having a huge savings account or having absolutely nothing by the time you retire:
Free Yourself of Any Debt
If you’ve got tens of thousands of dollars in student debt, your top priority needs to be paying it off as soon as you can. These debts are cumulative and will end up costing you more than you think as the years pass by, especially if you’re treating your debt as a secondary priority. You’ll find that your debt will end up stifling any investments that you’ve made in other funds, and any gains that you make in terms of finances will be put down due to the debt that you have to pay.
Even if you have a high paying career, it’s not going to make much of a difference if you’re not paying proper attention to a student loan that’s got an 8% interest rate. Make it a priority to get rid of it as fast as possible, and do not attempt to make any investments up until that point. Again, any money that you spend on investments for your future is going to be nullified by your debt. Any extra money that you have should be directed towards paying off the loans you have, and this doesn’t just account for student loans but credit loans as well. Once your debts have been paid in full, you should then start looking at the kinds of investments that you can make to ensure a bright future.
But don’t forget to save up even a small amount for a rainy day. An emergency might crop up unexpectedly, and without any savings to cover you, you’d probably end up borrowing money or getting a loan, adding to your already existing pile of debts!
Seek The Help of A Financial Planning Advisor
If you don’t have any idea of what you’re doing when you’re investing money, you probably shouldn’t experiment. The better option would be to have a financial planning advisor to talk to because they have the right kind of knowledge and experience that you need to be more financially stable in the future.
However, one of the simplest advice you can get is to invest for the long term. You’ll see many people investing for not more than a few months, but if you want to see yourself becoming rich in the long term, learn that you should invest like you won’t be seeing your money again for the next ten years or even longer. Choose carefully what you want to invest in, and then make a commitment. This process will be far easier if you have a financial planning advisor to help you out because they’ll know exactly which investments are likely to pay off in the long run – the money that you spend on this advice will be nothing in comparison to the returns that you’ll get in a few years time. However, if you haven’t gotten rid of your debts, then you’re better off getting a 401(k) account than trying to make investments because they won’t be paying off at all, and you might not have much savings in the future because of that.
Make sure that you try and incorporate these two major tips into your life. Don’t gamble your money away in risky investment plans and always research or ask for help before making any major financial decisions.
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