wealth building

10 Investment Opportunities for Young Adult

Your age as a young adult plays an important role in the type of investment you should venture into.  The best investment accounts for young adults with low or no fees and no minimum. Also, the investment plan matters a lot because not all investing goals for young adults involve long-term goals.

Now young adults who want to invest get confused because of the difference in the investment options. There are thousands of products and services with different firms and vendors that market these products in different capacities.  

The amount of available investing information they provide can be staggering and you may find yourself thrown off balance. The unsolicited advice from family members sets in, you might even see yourself sifting through ill-advised stock picks.

Early investment is the secret to a healthy retirement account. With the power of compound interest, which can add a huge boost to the investment, your money can work for you and grow even while you are asleep.

There are a few things a young adult should consider before venturing into investment – a young adult should consider his/her budget and emergency fund, it is recommended that a young adult should have about six months’ worth of expenses in a saving account set aside before investing.

It is also advisable to pay off high-interest debt before you start investing.

Checkout: 9 Tips to Payoff your Credit Card Debt Fast

Young adults still have time in terms of investing. They can take advantage of compound interest and tax-advantaged investment when investing in the long term. With that, young adults should learn how to start investing money on time because it will prepare them to be financially stable in the future.

As a young adult, you are stuck between so many investment options – finding yourself at a crossroad? Not to worry, we are here to help clear that up for you.

Here are 10 promising Investment Opportunities for Young Adults:

1. Cryptocurrencies

Cryptocurrencies are great examples of high-risk-high-reward investment assets that you can invest in with as little as $10-$100.

Generally, Cryptocurrencies are a form of decentralized virtual currencies that are cryptographically secured, they are designed to be used in the buying and selling of goods and services digitally.

Some cryptocurrencies like Bitcoin and Ethereum have gained widespread popularity and the backing of prominent individuals and institutions.

In 2021, online payment powerhouse Paypal (PYPL) announced that it will allow its users to pay in Bitcoin and other cryptos such as Ethereum, Litecoin, and Bitcoin Cash. Other major companies like Microsoft (Xbox), Twitch, Home Depot, Burger King, AT&T, Overstock.com, and Rakuten are accepting Bitcoin as a payment method.

With over a $1 trillion dollars market cap, cryptocurrencies are no joke, they are a big deal.

Nonetheless, not all cryptocurrencies are worth investing in, however, bear in mind that not every stock listed in the NYSE and NASDAQ is worth investing in.

Do you know that a $100 investment in Bitcoin back when it was worth just 6 cents would be worth around $70,000,000? And a $100 investment in Dogecoin early this year would have 10x in value.

There are a lot of cryptocurrencies that are currently under $10 you can invest in that have the potential to bring BIG returns. And because of their low entry point, you don’t need to break the bank to start investing in them.

All you need to do is to know as much as you can about crypto investing, create an account with Coinbase and start investing.

Generally, it is advisable not to go all-in with this type of investment because of its high-risk nature.

2. ETFs:

An ETF is a type of security that keeps track of a particular index, sector, or commodity. You can buy and sell ETF just like you can buy and sell stock. It can be done multiple times in a day, compared to mutual funds, which you can only trade once per day when the market closes. ETFs trade on an exchange.

ETFs are a very good choice for taxable brokerage accounts, because of their tax efficiency. They allow you to buy a bit of that one share you can’t afford to buy. With that, you still own a portion of the company. But be mindful of the fact that not all investing Apps or brokers will sell fractional shares.

3. Real Estate Investment Trusts (REITS):

Real estate is another fast-growing type of investment now. When you invest in real estate, it gives you the opportunity to have a portfolio of commercial real estate. It is more valuable than owning a single property here and there.

This is because the portfolio is invested in different types of property in different geographic locations. Real estate gives you a more corporate strategy than you get with a single property.

Real estate comes with a lot of benefits and advantages. The benefit and advantages supersede that of a single investment. You can invest in REIT with just a couple of thousand dollars. While investing in a single property would require a large sum of money for just the down payment.

One should note that the stock market does not affect the growth of real estate. Matter of fact, real estate investment trust continues to provide positive returns even when the stock market is bad. This is because REITs and commercial real estate continue to rise in value and also pay regular dividends. There is this circulation that REITs have outperformed stocks in the past few decades.

4. Buy a Home:

One good thing about owning a home is that it lets you build substantial equity over many years. One can buy a home out rightly or by installment payment, any which way, you just own a home.

The demerit to buying a home when you are young is that you may not be at a point in your life when making homeownership permanent works to your advantage. For instance, you may need to relocate to a different geographical area in the early stage of your career, but since you own a home already, it could pose a challenge for you.

Buying a home also has the advantage of leverage. If you buy a home with as little as a 3% down payment or no down payment at all, you will benefit from it as it appreciates. Moreover, you can always rent out the unit if you need to relocate.

You’re already paying rent, and if you can get a mortgage that’s close to what you are paying on rent wouldn’t that be a great investment opportunity?

As a young adult, owning a house is obviously an excellent investment. But also it requires serious thinking, time, and effort to make it work out if you believe it’s the right choice at this point in your life.

5. Open a Retirement Plan

As a young adult, do not think that it is too early to start saving for retirement. It is never too early. Consider having individual accounts or company retirement accounts. Retirement plans such as 401(k), 403(b) and 457 are the most way to save for retirement.

The traditional retirement accounts are tax deferral. It allows you not to pay tax until you withdraw the funds during retirement.

If a young adult at the age of 25 starts contributing $10,000 annually to a retirement plan, with a yearly return of 7%, he is sure to have $2,008,829 in his plan by age 65. This type of retirement may allow the person to have an early retirement.

Also, some company offers sponsored retirement plan. As a young adult, this should be your first choice. But if you don’t have a plan at work, you should consider a traditional or Roth IRA. Both allow you to contribute up to $6000 annually and give tax deferral on your earnings.

6. Rental Real Estate

Rental housing can be an excellent investment if you have the willpower to manage your own properties. Though the unstable economy may make it seem impossible to achieve, financially the purchase of a new property is a great start in investment.

To venture into this business, you will have to choose the right property, buy it, build or maintain it and deal with tenants.

This type of investment is a good investment for long-term investors who want to own and manage their own properties and generate steady cash flow.

However, you can stumble into a few bumps like not being able to buy and sell assets in the stock market with a click on your internet device. Also, lack of liquidity might pose a challenge if you need to access cash quickly. You might also need to endure an occasional call about an electricity failure, broken pipe, or a damaged soak away pit. But hey, nothing great comes easy, you have to be up to it.

7. Pay off your Debts:

As a young adult, you have to find a way to create a workable balance between your debts and investments. Paying off debts is one of the biggest investments a young adult can make.

Your credit card debt should come first because they are usually the smallest debt we do not pay attention to but it comes with the highest interest rates. Whatever percentage you are paying on a credit card, be sure to know that you won’t be able to get that kind of return consistently when it comes to your investment.

Checkout: 9 Tips to Aggressively Pay off your Credit Card Debts

Young adults are advised to venture into debt payment investment first because debt reduces cash flow. In other to increase cash flow, you should decrease your debt rate.

8. Improve your Skills

Young adults should plan to invest a small amount of money and time to acquire one skill or the other they may need in their career. This is because, young adults tend to change their career often, as a result of looking for a high-paying job or for satisfaction in a particular career.

Most young adults do not see skill acquisition as an investment. Or rather, they are ignorant of the fact that skill acquisition is an investment.

Taking additional college courses, ordering online courses, or enrolling in various programs will improve and inform you of things you are unaware of. It could be something you could easily do, but because you are ignorant of it, you are left in the dark.

Money spent on skill acquisition without a doubt is one of the best money you will ever spend. And that’s a great investment in the truest form.

9. Invest in Higher Education

The decision to attend college or not is one of the most difficult and expensive decisions that one will ever make. The factors that may make a university education worth the investment are one’s interest to pursue a career that requires a degree, the desire to move up to a higher corporate ladder, or not being able to find a job in your field.

If one decides that a college education is worth investing in, looking for a local scholarship will be a great choice to make. This is because every year thousands of dollars of scholarship money go unclaimed because no one applies for them.

10. Term Deposits

This is when you set aside some amount of money for a fixed period. This can be done through either a bank, credit union, or building society. During this period, you will earn interest on your investment.

But the returns from the investment are lower than the other risky investment. And Hefty fines are charged if perchance you want to access the money before the term is due

FINAL NOTE:

Young adults should carry out research before investing. This is because a well-researched approach to investing coupled with self-will and discipline can go a long way to ensure that your wealth-building journey is safe and yields results likewise.

Young adults are advised to carefully analyze all the investment options and then invest according to their financial goals.

Checkout: How to Make a Personal Investment Plan

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