People under 35 are just starting to advance in their careers and might be thinking about buying houses and starting families. This is also the best time to start investing. The younger you are when you start to invest, the longer your investments will have to grow and compound. Plus, if you lose money, you would still have many years to earn it back. If you are a thirty-something regular income earner, here are several great ways you can invest:
Open an IRA
When you are in your thirties, it’s best to start investing towards your retirement by matching your employer’s 401(k) contributions. In addition to that, open your own Individual Retirement Arrangement (IRA) as well. It’s the best way to invest towards the future with well-managed taxes. They’re also a fairly common choice for people nowadays, and many resources such as irainvesting.com are available online as a result to help you learn more if need be.
IRAs are managed by a trustee that you appoint. That means you don’t have to deal with the everyday hassle of managing every single investment. Plus, you can opt for a Roth IRA that prevents taxes upon withdrawal. Your 401(k) is pre-taxed, which means you pay taxes when you withdraw money in the future. With a Roth IRA, your contributions are taxed, so you don’t have to pay taxes when you withdraw the compounded returns.
Supplementing a 401(k) plan with an IRA of your choice is one of the best investment decisions you can make in your youth.
Buy and Sell Cheap Stock
The best time in life to try your hand at day trading and invest in stock is before you reach middle age. The volatility of the stock market means that you are bound to lose some money at one point. However, you are young enough to earn back the losses with another job. Also, the earlier you enter the stock market, the more experienced you would be close to your retirement. Financial advisors generally do not recommend older investors to trade cheap stock because the risk of being indebted is high.
Buy Company Bonds for the Long Term
Investing is not all about dabbling in stock. As Warren Buffet once said, invest for the long term. If you really want your investments to compound, buy stocks and bonds from individual companies with a great competitive advantage. Bonds have far less risk involved than stocks, so these assets are great to diversify a portfolio with. Before you purchase bonds, research the company well. Bonds are worthwhile as long as the company can remain at the top of its game for years to come.
Homeowners: Rent a Part of Your Home
If you are one of the lucky few thirty-somethings to actually own a home, you can start making money off it. Does your house have an extra room or a basement to spare? Then rent it out. This is one of the simplest ways you can invest in real estate. Online marketplaces like AirBnB makes it easier than ever to find suitable tenants willing to pay reasonable rental fees. You will be able to passively earn several hundred dollars a month by investing in your own home.
Don’t wait too long to start investing. Find an asset class that you can really understand and jump right in. However, make sure you educate yourself on the way to make the right decisions.