INB Mobile Banking

Inter National Bank

App StoreGoogle Play
x
Skip to Main Content

In 2015, Millennials beat out the Baby Boomers to become the largest generation currently in the workforce. They also tend to stay with their employers longer than Baby Boomers did at the same age, earning more job security and gaining more hands-on training.

In fact, Millennials as a group are more optimistic about their futures than their older counterparts. But what are you doing to prepare for yours?

Whether you’ve got an investment plan in place or you’re just starting out, there are a few smart investment strategies that Millenials should keep in mind.

Budget Like a Boss

Before you start investing, it’s important to understand your personal cash flow. Knowing what money you have coming in, going out, and what you’ll need down the road is crucial to your financial health.

Don’t know where to start? These days there’s an app for almost everything. From investing and money management, to planning for retirement and simple budgeting, there’s something for everyone. Check your app store and some of the budgeting apps available: Personal Capital, Mint, You Need a Budget, and PocketGuard are all highly-rated options.

Choose Smart Credit Card Options

Credit cards have an unfounded reputation for being a necessary evil. In reality, a responsibly used credit card is an excellent means of building credit. Some even have a few perks.

While learning the proper use of a credit card is in-depth on its own, choosing the right card is an important step.

While a basic low rate card certainly isn't a bad starting point, think about a card that offers rewards points. With each dollar you spend on your credit card you will earn back a point, which can be redeemed for gift cards, travel vouchers, merch, or good ol' cashback. If you're going to be spending that money, why not get a little back at the same time?

Don’t Neglect Your Savings  

While saving and investing are different strategies, they are both key components of a healthy financial outlook.

Most financial experts will tell you to focus on beefing up your personal savings before you begin to funnel money into your investments. Financial guru Dave Ramsey recommends keeping three to six months worth of expenses reserved in an emergency fund.

This gives you a buffer, so you won’t need to turn to high interest credit cards or taking on more debt when life inevitably throws you a curveball. Having that safety net is crucial, and the more money you have saved the more you will have to invest down the road.

Retirement, Retirement, Retirement

Sometimes we think of retirement as something happening in our distant future, but it’ll be here sooner than you think.

The most popular options are a 401(k) and an IRA. These are both tax-advantaged options for long-term investing.

If your employer offers a 401(k), take a look at what they have to offer. Most companies will match up to a certain percentage of your salary. In this case it makes sense to contribute the highest possible amount and take advantage of the free money.

If your employer doesn’t offer a 401(k), consider an IRA (Individual Retirement Account). An IRA is different in that it’s not employer-sponsored and it’s not funded by payroll deductions. The account is funded solely by the individual, so it’s important to contribute the highest amount that works for you. Typically an individual under 70 years old can contribute up to $5,500 a year.

Both IRAs and 401(k)s have investing options, so your money grows faster than if you were to put it aside in a simple savings account. Note that your investment options are more limited with a 401(k) than in an IRA. They also both have certain tax benefits.

Set Specific Goals

Lay out your goals and plans early on. Make sure your goals are measurable so that you can stay on track. Keeping your desired outcomes in mind will also make investing decisions easier.

If you’re seeking higher returns more quickly, you can invest aggressively and focus on short-term investments. If you want to grow your money over time, it may pay off for you to stick to moderate investments and focus on the long term.

Consider a Side Gig

Are you finding that you don’t have enough to invest after bills and living expenses? Consider finding a side gig to help fund your investing. There are tons of easy ways to bring in extra money. In fact, according to the New York Post, half of millennials are already working ‘side hustles’ to bring in extra cash flow. From selling vintage clothing online to freelance editing, opportunities are plentiful.

Embrace Risk

Let’s face it: investing can be intimidating. You may wonder what exactly you’re risking when you put your hard earned dollars to work, but it’s important to keep in mind that every investment carries some sort of risk.

One way to mitigate investment risks is diversification. When deciding where your money should go, don’t tie all your assets up in one place: invest in companies from different sectors and in businesses that operate in different countries. When you have a variety of assets, you’re less vulnerable to loss when one particular sector suffers.

Remember also that generally the more risk, the bigger the reward. If you’re just getting into investing, you may want to focus on low-risk investments, but what’s important is that you get started. Don’t let fear hold you back and get in the way of your earning potential.

Make Frequent Investments

Fund your investments on a regular basis. The amounts don’t have to be huge; what matters is that you’re contributing. The more capital you have to work with, the more money you will potentially make.

Personal finance apps like Stash will allow you to set up a custom amount to fund on a regular basis. This automation ensures that your portfolio will continue to grow while allowing you to live your life.

Keep Costs Low

Don’t get tied up with fees. It doesn’t make sense to work hard growing your portfolio only to lose a chunk of it to fees. While it’s true that all investments have costs, staying educated is your key to reducing your fees and keeping more of your money.

Before investing, do your research and read through the fine print. Take the time to learn about expense ratios, management fees, brokerage fees, advising fees, commissions and transaction fees.

Remember to Give Back

Not only does donating to charity make you feel good, but in some cases giving can also make an impact on your taxes.

When filing your taxes, you’ll need to itemize your deductions. It’s also important to make sure that you obtain receipts, even for cash donations. Keep in mind that you’re only able to deduct donations made to qualifying charitable organizations so it’s important that you ask to see their letter from the IRS. Money you save on taxes can be funneled into more investments or into savings.

Focus on the Big Picture

Investing isn’t a get-rich-quick scheme. You won’t become a millionaire overnight.

Successful investing takes education, dedication and patience. When you put your money to work for the long term, you will pay fewer fees than if you’re constantly buying and selling. Warren Buffett said it best: “Only buy something that you’d be perfectly happy to hold if the market shut down for ten years.”

Remember that while investing can seem like a daunting task, it is absolutely worth your time and effort. Getting started is a challenge, but as the saying goes, a journey of a thousand miles begins with a single step.