Safest Investments for a Financially Conscious 20-Something

As you get older, there will come a time when you must leave the nest and stop solely relying on your parents or guardians. Providing for yourself is an evident skill needed for the inevitable future, with many saying you need to become financially conscious and stable when you hit your 20s.

The truth is that only 24% of Americans are financially independent by the age of 22. There is nothing wrong with getting help from your parents, but being able to cover your expenses at an early age can set up a firm financial foundation in the years to come.

The Importance of Becoming Financially Stable in Your 20s

Being financially conscious covers the extent to which you know your ability to change your financial outcomes. This includes your willingness to act when it comes to such matters. On the other hand, being financially stable means having enough money to live and not worry about cash. Without either, you would not live and function in society properly, most especially in your 20s, when you are supposed to be enjoying yourself while preparing for your retirement years.

Aside from being able to afford your expenses, financial stability comes with many other benefits such as better mental and physical health. After a survey conducted by the American Psychological Association, 73% of Americans listed finances as the number one factor providing them stress. This is a massive problem because stress isn’t just unpleasant; it can also be deadly, with it being a significant contributor to heart disease, stroke, and even depression and anxiety. By doing the work needed to get your finances in order, you can add a few years to your life and even save yourself a few bucks on medical bills.

Another benefit of being financially stable is more job opportunities. Most employers don’t want money problems affecting their business flow, which is why one-third of them do credit checks on candidates. Financially stable people are also known to focus better on work and are highly productive, making them great additions to companies.

Lastly, financial stability also leads to familial stability since money problems lead to 84% of marital issues. Merely being able to pay household bills on time and readily meet your family’s needs can help create healthier and happier relationships.

Man holding money

Investments as a Financial Milestone You Should Hit

So how can you become financially stable and gain these benefits?

One thing you can do is invest. Investing is one of the biggest financial milestones you can hit, with it not only aiding in sound money management but also ensuring both present and future financial security and stability. With that being said, here are a few safe and reliable investment ideas you can consider.

It is a good idea to invest in Real Estate Investment Trusts. Real estate has been a strong performer in finances for at least the past half-century. It often moves independently in the stock market, which means more interest and more profit for investors.

Mortgage funds are also interesting to try, as they are prevalent among those who value earning passive income. You can buy shares or units in a fund from a reputable mortgage company. This will then be lent out to multiple borrowers. There are two ways you can earn: 1) when the borrower pays on time, and 2) when the borrower sells their real estate. You will be considered as a shareholder, so make sure you check the fund manager’s fees and the average LTV.

Stocks are the given partial ownership by a company or corporation. Bonds, on the other hand, are loans to a particular company or corporation. Both can help you earn money by collecting interest income and generating capital gains. Still, bonds are relatively safer investments since most pay investors a fixed rate of interest income backed by a promise or contract. Stock sometimes pays dividends, but there is no legal obligation to make these payments to shareholders.

The S&P 500 Index Funds provide an average annual rate of 10% return, with its reliability going back to 1926. If you were to invest around $10,000 at age 20, you’d have earned $452,592 by age 60.

You may also look into investing in particular industries. One of the safest industries is food, anything associated with food like grains, cereals, and beverages. Another is the textile industry, which includes producing and processing raw materials like cotton, linen, and silk. These two are reliable because they are essential for human life.

No one can survive without clothes, and indeed no one can survive without food. Thus, the textile and food industries will likely continue to flourish, making them all around a reliable way to earn money through investing. You can gain up to 10% to 15% of what you invested in each of these industries yearly. If you invest $5000 at the age of 20s, you will gain at least $30,000 by your 60s.

Overall, although investments are very tricky to get into, they will be all worth it in the long run, especially if you invest as early as your 20s. Doing so ensures present and future long-term financial security. The money generated from your investments can provide added financial protection and income in future business opportunities. Always consider the safest investment that will truly prepare you for any future endeavors in finance, all the way up to retirement.

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