Best investments for young adults?

Hi! Way to go! It sounds like you’ve done all the right things and are in a great place. There’s so much information about investing and about what things are smart to invest in – your best bet is to spend some time on safe, non-selling, educational websites like one of these:

Investing in the Stock Market

http://investor.gov/

http://www.pbs.org/your-life-your-money/tools_resources.php

http://investor.gov/tools

http://www.saveandinvest.org/

http://investor.gov/introduction-markets

http://www.usa.gov/topics/money/investing/tips.shtml

Stock Options

http://www.optionseducation.org/en.html

Investing in Bonds

http://www.finra.org/investors/bonds

You also want to make sure that you take care of all of the aspects of your financial life, not just the investing part. Financial planning entails the concept of complete financial health including:

·         Managing cash flow

·         Planning for home purchases, kids’ college and other long term goals

·         Insurance/ Risk Management

·         Minimizing taxes legally

·         Retirement planning

·         Investing to grow your wealth

·         Estate planning (including wills and trusts)

Here are some steps I recommend to plan your finances:

1.      Make sure you have an “emergency fund” – 3 of 6 months of money in a liquid (savings or checking account).

2.      Make a budget if you don’t have one. I am not sure if you already have a budget, but the first thing today is create a simple budget so you can see what money comes in and what goes out.  Here are three free sources for budget worksheets from Navy Federal Credit Union, America Saves, and the Federal Trade Commission.

https://www.consumer.ftc.gov/articles/pdf-1020-make-budget-worksheet.pdf

https://www.navyfederal.org/life-money/managing-your-money/creating-a-budget.php

http://www.americasaves.org/for-savers/make-a-plan-how-to-save-money/creating-a-budget

3.      Once your budget is completed and you have money in your emergency fund, if you have additional money left over each month, you want to figure out what to do with it. You probably want to save for retirement and you may have some long-term goals like buying a house or new car or saving for a child’s college.

4.      If you aren’t contributing to your company 401(k) plan (if one is offered), consider starting, especially if your company matches any of your contribution.  That’s like getting extra salary!  In fact, if your company does match contributions, you’d want to put enough money in the 401(k) to max out that match.

5.      If you aren’t reaching your financial goals, consider cutting your spending so that you have more to invest. Or you could freelance to increase your income.

6.      Start investing the extra money you aren’t spending. You can use a do-it-yourself approach (such as an ETrade or Scottrade account) or hire an investment advisor to help.

7.      Evaluate your insurance needs – life, auto, health, renters etc. to make sure the assets you have gained are safe.

8.      Make sure you have a will and that your insurance beneficiaries are up to date.

These steps are just a start. If you are interested in finances and money management there is lots of good information out there to help you do it yourself. If you want to pay a professional for advice, consider hiring a CFP® (look for them on the CFP Board website) or http://www.cfp.net/utility/find-a-cfp-professional?utm_source=find-cfp&utm_medium=header&utm_content=homepage&utm_campaign=header to help you create and follow a comprehensive financial plan.

Best wishes to you and thanks so much for writing!