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For just about anyone under the age of 30, the thought of investing might seem completely foreign.
You've just got enough money to make ends meet with rent, fuel for the car, going out with friends and university debt, right? But what if we told you that investing what's left over might be the key to breaking free of financial stress and becoming financially independent?
Below we've listed a great few ways for young people to invest that don't involve a $10,000 stake in a FAANG stock.
Our first tip for young Australians looking to grow their savings accounts is to open a high-interest term deposit account. Essentially, these accounts 'lock' your savings away for a period of time whilst building interest. Term deposit accounts are great at forcing some expense restraint too since it's quite difficult to take out any of the money you put into the account - until the term is up.
Something to remember here is to make sure you're not depositing too much money as you'll want to make sure you have some emergency savings.
If there's one investment opportunity that works in favour of young people, it's the stock market. You're able to get in early, put down some initial investments and build on them over time. By doing this you could be looking at some really big gains by the time you're 25 or 30, depending on when you start investing.
To make sure your chances of success are high, it's best to turn toward mutual funds and ETFs earlier on. This way if the market fluctuates you're less likely to be negatively affected. Just remember these funds often have a $1,000 to $5,000 minimum deposit requirement.
We suggest making use of broker platforms as it gives you direct access to stocks, their projections and an easy way to invest.
A double whammy of sorts is the long-term savings account. If you're young, buying a home isn't typically on the top of your mind, especially with the market the way it is. However, there's a good chance you know how important saving and investing is, so set up a long-term savings account.
Over time, make it a priority to put a few hundred dollars a month into it and watch it grow. After working on the account for a few years, there's a possibility that your routine saving and interest has helped you grow the account fairly big.
The best part of having a long-term savings account is the fact it can be converted into a home loan deposit. All those years of saving will have paid off by improving your chances of having a home loan approved and reducing your monthly payments!
This means of 'investing' is an indirect way of keeping your investment and savings accounts safe. In , you're able to look to renting items or electronics you don't use, sell items online or even walking dogs or petsitting. These are all really easy ways to make some extra cash that will prevent you from digging into your long-term savings and investment accounts on a rainy day.
If you're a fashion lover, there are even platforms that give you the ability to rent clothing you don't use too often. This is especially useful for making use of those suits or dresses you only wear a few times a year.
If you're younger than 30, then it's just about a certainty that you're a digital native. Use this to your advantage and get in on the automated investing applications that live in the App Store. Apps like Raiz and Robinhood work by skimming your bank account for loose change and sending those pennies to your investment account.Over time you'll see your investments growing larger and you didn't even have to lift a finger.
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