How Millennials Can Start Investing
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Young professionals are seeking financial advisors to help them invest and develop financial goals.

You’ve been in the workforce for a few years. Perhaps you’ve even been promoted or are in your second or third job. Maybe it’s the first time you’ve been able to accumulate extra cash, and now you need to get serious about your money. But getting serious about your money can be overwhelming — how do you know where to invest that money in order to earn a decent return?

In today’s economy, the answer may depend on a number of factors. That’s why it may be time to work with a financial advisor.

Start Saving for Retirement Now

It really is never too early to start investing in your future and your retirement. If you have money left over at the end of each month and you haven’t maxed out your employer’s matching contribution for your 401(k), you should invest a greater percentage of your paycheck to your retirement savings plan. If your employer doesn’t offer a 401(k) plan, consider setting up a traditional or Roth individual retirement account (IRA) and work toward contributing the maximum allowable per year.

“Younger investors may have seen their parents take a hit on their retirement accounts, only to bounce back from that low point after a few years,” says David Johnson, Vice President and Wealth Strategist for Regions Private Wealth Management in Clayton, Missouri. “It still holds true that the younger you are, the more aggressive your investment strategy can be.”

Banking in Addition to Investing

Setting up rainy day savings in addition to retirement savings should be part of your overall financial plan. Having six months or more of living expenses readily available can help get you through some of the unpredictability you might face throughout your lifetime. The amount of savings can be adjusted to your comfort level, Johnson says.

Savings can be held in money market or higher-interest savings accounts. Keep in mind, Johnson says, that interest earned in a money market account is now often only negligibly higher than interest rates for savings accounts. “Yields have disappeared,” says Johnson. Moreover, money market accounts can be riskier and somewhat restrictive compared to regular savings accounts. For security and liquidity, a high-interest savings account may be a great option.

Investing Can Help Maximize Your Return

With savings and retirement plans in place, you now can look for other investment vehicles to grow your money — from conservative low-yield options such as certificates of deposit or bonds, to options with more risk but potentially greater returns such as stocks, index funds, exchange-traded funds, and mutual funds. An advisor can help identify options that best align with your goals, risk tolerance, and other life factors.

Starting savings and investment planning in your 20s and early 30s may help you build wealth over the length of your career and place you in a less stressful financial situation as you enter retirement.

Learn more about millennial mindset when it comes to investing.

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