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7 Rules for Investing in Your 20s (best way to invest when you're young) - YouTube
Channel: Wealth Hacker - Jeff Rose
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when I was 20 years old I was broke I
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didn't know anything about investing I
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didn't know what a mutual fund was I
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didn't really know how to invest in the
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stock market I barely had $100 to my
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name I would have killed for one of
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these so by the end of my 20s I had paid
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off all of my debt I was investing into
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my 401k I had maxed out my Roth IRA in
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multiple years I was on top of the
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investment world like I had figured it
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out so how do I go from being broke to
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being on top of my investment game well
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that's because I figured out the seven
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rules to investing especially if you are
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20 years old and we're gonna find out
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what these seven rules are right now
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[Music]
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now most people assume that since I was
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a finance major that I should have known
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how to invest that I should have known
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what a mutual fund is what an ETF is how
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to buy my first stock but the reality is
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that they didn't teach his debt in
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college least the college and the
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classes of the I wind so when I started
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my career I didn't know how to invest
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now thankfully my career started with me
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becoming a financial adviser so you
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talked about getting real world
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information real world experience on how
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to invest like that's where I learned
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everything so when I made my first
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investment I had a financial advisor
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there at the office show me how to buy
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my first mutual fund I also bought my
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first stock which ended up being a
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complete flop but still I felt good I
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feel confident like I'm buying stock now
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like I'm investing I'm 20 years old and
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I'm investing but there wasn't get to
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remember that when I start investing I
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wasn't investing hundreds of upon
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hundreds of dollars I started investing
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with as little as $25 per month
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could I have afford more yes I could
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have and in fact I should have invested
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more but I still feel good that I was
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starting with as little as $25 and that
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mutual fund that I started with it
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doesn't even exist anymore I don't if
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they got bought out or they shut it down
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like it wasn't a great mutual fund it
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wasn't horrible nonetheless like there
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were so many other options that were
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better than that one but once again it
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was all about getting started getting my
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feet wet getting used to understanding
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how mutual funds work and how the stock
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market works and it was really just that
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real-world experience that taught me
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that showed me how to start investing
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the right way in my 20s and that brings
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me to the first rule of investing in
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your 20s in that rule is just freaking
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start I don't care where you start
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investing just start somewhere I get so
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many people that ask me so many comments
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asking me just where is the best place
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to start do I start with this online
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broker do I start with this bank do I
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start with this app in my response to
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all of them the best place to start the
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best place to start is we
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you're going to open the account and get
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started it doesn't matter where you
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start just that you do you just have to
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start that's why I shirt at the
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beginning the mutual fund that I was
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putting in $25 per month like it was a
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crap mutual fund it was a crap mutual
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fund but just getting started in that
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fund open the investment world to me to
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where I finally started learning more
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about it how to really invest how to
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identify what's a good investment what's
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a bad investment
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you know we're the ones I should avoid
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or we're the ones I need to put more
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money in and nowadays like there is no
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excuse to not invest there are so many
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different HAP's there are so many
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different platforms you can even invest
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your spare change yes you can start with
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a quarter you think I'm joking but I'm
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not there's actually investment apps
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that will invest your spare change apps
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like digit and acorns will take your
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spare change and put it in the stock
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market so you don't need a hundred
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dollars a month you don't even need
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twenty-five dollars a month you can get
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started with your spare change now if
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you want to invest even more there are
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apps that allow you to invest more but
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doesn't mean that you're paying a lot of
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commissions and fees one of those apps
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is Robin Hood so Rob ahead allows you to
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invest with zero commissions they don't
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have a minimum account balance and you
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can buy stocks and ETFs now with Robin
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Hood they are limited and some of their
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offerings so if you want more
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flexibility you can check out another
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online broker m1 finance so with m1
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finance they don't have any Commission's
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any trade costs but you do have a
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hundred dollar minimum to get started
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but it's just a hundred dollars like
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it's not a lot of money to get started
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investing in the market I know you can
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get your hand on one of these I know you
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can get your hand on one of these I
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believe it I believe that you can get
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your hand on one of these I know it I
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know it and if you're not comfortable
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with some of those apps where you have
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to choose your investments let's say you
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don't want to choose individual stocks
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and you want somebody to help you with
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that
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then there are other online platforms
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like betterment and wealthfront
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where you just decide how you want to
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invest how aggressive you want to be
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what's your time horizon and they will
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choose the investment strategy for
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you so I say again there is no excuse
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not to get started just freakin start
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alright the second rule is you have to
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respect compounding interest it's crazy
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to me that compound interest the whole
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concept I didn't learn that until my
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junior year of college and the remember
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the first time I saw one of those tables
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that showed how much money could grow
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over a period of time like it blew me
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away
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many people don't understand many people
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don't appreciate many people don't
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respect the power of compounding
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interests but if you are in your 20s
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this is something that you have to
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respect let me give you a quick example
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that shows you why you need to respect
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compounding interest so let's say that
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you are 20 years old and you start
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investing $300 a month if you are making
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a percent return on your money by the
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time that you are 60 years old you will
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have $1,000,000 you'll have over a
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million dollars so now let's look at
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somebody that waits 10 years to get
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started so now you're 30 years old
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you've waited 10 years you're still
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doing $300 a month making 8% return by
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the time you're 60 if you start at 30
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you're going to have four hundred and
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forty thousand dollars so we're talking
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a five hundred and fifty thousand dollar
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difference just because you've waited 10
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years to get started oh by the way you
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only deposited $36,000 in that 10 year
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period but that $36,000 grew to be an
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extra five hundred and fifty thousand
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dollars that is the power of compounding
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interest and why it's so important to
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start right now all right the third
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investment rule is to uncover those
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golden eggs let's find out what's in
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this golden egg oh I like this one when
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it comes to investing you only know what
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you know so if you've never invested if
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you've never bought a stock or a mutual
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fund or open an account you don't really
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understand how it works in another video
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I shared where I taught a 16 year old
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that had saved up five hundred dollars
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and showed him how to invest that money
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and how over his lifetime he could grow
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that to be Oh
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a half a million dollars now if you
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watch that video and if you look at the
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comments there are some pretty funny
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ones many people were saying like oh
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that's not enough to get started or he
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needs to be investing in that something
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else other than a mutual fund or by the
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time he's 60 he's gonna have all this
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money and he's gonna be old and almost
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dead I mean it's like it's just funny
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what people had to say on that video but
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the one thing that nobody commented on
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that nobody realized is that you have a
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16 year old that is starting to invest
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he's opening an account he's putting
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money into the mutual funds he's
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understanding how the stock market works
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he is starting so early that he is going
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to become so familiar with all the
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different options that exist and he's
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going to become an expert investor he's
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gonna be able to teach other 16
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year-olds how to invest and how to
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become financially free before they're
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40 or 50 years old I mean this young man
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is going to be on top of the world it's
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all because he started investing listen
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you can watch youtube videos all day you
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can read books you can listen to
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podcasts about investing but until you
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actually start you're not going to learn
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what else is out there
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alright the fourth rule on investing
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your 20s is to choose tax-free status
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now this bit of advice contradicts a bit
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what Dave Ramsey personal finance expert
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radio host author has to say so if you
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ever read Dave Ramsey's book Total Money
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Makeover when he talks about investing
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and getting started he suggests that
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people start investing with their 401k
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so you do your 401k to get the free
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match so if they have a 4% match
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whatever it is that your company offers
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invest to get the free match to get that
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free money after you get your free money
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then you go to the Roth IRA and you max
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that out so if you get the point where
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you're putting over $5,000 a year into
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the Roth you do that and then you go
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back to the 401k so my advice is a bit
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different because I suggest that people
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start with the Roth IRA even though if
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your 401k is offering free money skip it
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and choose the Roth and why is that my
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reasoning is this most people that sign
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up with their 401k have no idea what
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they're putting their money into they
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might sign up online they might meet
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with their HR director and fill out one
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sheet of paper and next thing you know
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they're on their way they're putting
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money to a 401k and they have
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ideal where their money is going but if
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you open a Roth IRA you actually have to
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go and do it whether that go to a
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brick-and-mortar investment place around
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where you live or going online setting
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up an account actually having to choose
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those investments by having to
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physically open your own Roth IRA
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account you're gonna have more skin in
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the game you're going to learn so much
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more than just signing up online filling
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out a sheet of paper and being done with
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it
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so yes you might be giving up some free
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money or 401k but you're gonna gain so
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much more in knowledge and experience
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that's gonna allow you to invest and
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grow your wealth so much faster sorry
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Dave I still love you this is ridiculous
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rule number five is to invest in your
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number one asset where's that number one
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asset that asset is you invest in
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yourself
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I'll admit early in my 20s I don't think
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I really understood what this meant you
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know invest in myself when I had an
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opportunity to become a CFP a certified
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financial planner
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that was some out-of-pocket costs time
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resources that I had to do to get it but
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I knew that getting that designation was
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well worth it was definitely an
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investment that was worth it but the
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biggest way that I invest into myself in
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my 20s was reading as many books as I
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could I have talked about reading books
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so much on this channel you can check
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out other videos on some of the most
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inspirational books that I've read but
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reading these books especially in my 20s
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when I didn't have parents that knew how
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to teach me the basics of finance or how
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to start a business or to become an
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entrepreneur by reading these books it
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inspired me it motivated me it showed me
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real life situations real life stories
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of people that had achieved massive
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success
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and it gave me a roadmap to begin my
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journey another big way that I invested
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in myself in my 20s was attending
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conferences now I don't really know what
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was the point of attending a conference
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but starting off my career as a
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financial advisor we would have an
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annual conference and I wanted to go to
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these ideally I didn't really know why I
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was going but after I attended my first
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one I got it when I attended these
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conferences I was networking with other
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financial advisors that had achieved the
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level of success that I was shooting for
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they had breakout sessions of just
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teaching different principles on whether
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it becoming a better fighter
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planner or strategies on how to grow
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your business I've learned so much from
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these conferences like I went to every
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single sessions I could because I
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devoured all that information so I can
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come back and put it into practice and
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nowadays there are so many different
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ways that you can invest into yourself
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this could be joining a paid mastermind
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group or paying a mentor to mentor you
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listening to podcast listening to
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audiobooks buying courses just learning
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whether they going back to school or
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taking courses online like there are so
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many ways to invest into yourself and to
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get that knowledge that you need to take
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yourself to the next level aren't the
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six wolf investing especially in your
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20s is understanding the power of the
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side hustle now I have another video
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where I argue that I make the case that
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the side hustle is the best investment
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that you can make for yourself so why a
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side hustle like why is that such a big
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deal especially in your 20s before I
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answer that let me ask you this do you
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want to be in control of your future or
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do you want someone else to be in
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control if you want to be in control
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that is what the side hustle can give
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you so why is that such a big deal the
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side hustle is something that is not
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going to change your life overnight but
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if you are investing time and resources
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into this side hustle this side business
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that eventually produces a healthy
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income this gives you so much
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flexibility gives you so much power not
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to be stuck in a dead-end job that you
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potentially hate and let's get one thing
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clear the side hustle is not a part-time
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job so this is not driving for uber this
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is not getting a job at Starbucks or
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working overtime at your current job the
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side hustle is building an asset that
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could potentially give you passive
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income down the road that is the power
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of the side hustle a side hustle could
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be a blog it could be a YouTube channel
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it could be freelancing social media
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marketing graphic design there are so
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many different things that a side hustle
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could be that it can change your life
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but you just have to start it remember
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point number one you just have to start
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right the seventh rule investing in your
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twenties is do what the wealthy do now
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when you start in your 20s this might be
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kind of tough but one of the ways that I
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was able to really amass a lot of wealth
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especially in a tax-deferred status was
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opening
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a self-directed retirement account now I
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shared this in another video how the
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wealthy people this is how they do this
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so when you see mega investors buying a
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real estate and they're buying it in
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their IRA you're wondering how do they
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do that how they buying real estate in a
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tax-deferred account this is how they do
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it so if you don't know what a
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self-directed retirement account is
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right now that's okay at least you're
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now familiar with it and as your site
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hustle grows as a side business grows
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you start to know okay this is something
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that I could consider down the road so
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how else to wealthy people invest well
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this is no surprise but wealthy people
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invest into real estate free real estate
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I'll pee my pants come get your damn
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land ship I got real estate them to get
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better than this now this is something
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that I will not proclaim to be an expert
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in I have some real estate investments
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but there are definitely people that
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know a lot more about investing in real
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estate that I do how I got started
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investing into real estate is a few
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different ways the first of which is
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real estate notes so with these real
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estate notes I've got a buddy of mine
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who is an expert real estate investor
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and he started raising funds raising
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capital to invest more into more
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properties and with those properties we
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basically invest money and he pays us a
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dividend each month for that investment
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with this investment I'm getting paid 7%
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interest on my money and I don't have to
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lift a finger I don't have to do a thing
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I don't have to worry about the property
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but if something happens to the property
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I do have ownership of that property so
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that's how that investment works I also
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invest into real estate utilizing fund
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rise fund rises an online platform that
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allows you to invest into real estate
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properties and then you have a company
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which is fun rise and is picking those
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properties and managing those properties
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for you what I love about fund rise is
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that it's so similar to the real estate
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notes in that I just opened an account
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put my money in and let them do their
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thing with fund rise you need five
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hundred dollars to get started that's it
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and you can get started investing into
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real estate now if you want to up your
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real estate game and invest into real
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properties you need to check out another
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video with my buddy Travis so Travis has
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been able to invest into like five or
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six different properties here in the
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Nashville area and he is making a
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killing
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he's already turned a profit on one of
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those properties he's getting ready to
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turn a six-figure profit on another
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property he's cash flowing his other
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rental properties I mean he has done an
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amazing job and you'll especially love
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checking out that video because he
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shares that journey of making that first
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purchased buying that first rental
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property that led him to his other
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properties once again with Travis it was
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all about getting started so if real say
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is something that you're interested in
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check out that video and you'll learn
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some of the basics on how to do it how
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to do it right it doesn't matter where
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you are in your investment journey
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whether you are a complete rookie you've
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never invested you don't know how to
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start or have you been investing for a
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few years and you still want to learn
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more if you're in your 20s these are
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seven rules that can 10x where you're at
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right now heck weekend a hundred x
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depending on how much you're willing to
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invest how much you're willing to do the
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research do the work and dive in to get
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started but as I said throughout this
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entire video it's all about getting
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started so if you want to invest your
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spare change with acorns or digit if you
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want to buy stocks utilizing Robin Hood
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or M one finance or you want somebody
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like betterment to choose your
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investments for you or maybe you want to
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get started real estate you want to
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check out fund rise whatever that is the
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links will be in the description below
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check them out but most importantly
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check them out and get started this is
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Jeff rose reminding you that it's your
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money it's your life and only you can
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make it awesome until next time y'all
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have peace
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