|
Personal Finance -
Investing
|
|
Written by Karl Wolf
|
|
Tuesday, 15 December 2009 02:21 |
|
Page 1 of 2
5 Tips for Twenty-Somethings that You Wish You Had
Wouldn't it be nice to turn back the clock and take everything that you learned about finances in the last ten, twenty or thirty years and give them out as cliff notes to your son, daughter, grandkids or a friend's kid at the beginning of their adult life? Right now, they're probably more interested in getting their next date, figuring out what they want to do in life or which fraternity is going to have the best Winter party. But as the holidays approach and they are on holiday break, you have a chance to impart some personal financial wisdom on them. Of all the gifts you give them this year, the gift of financial wisdom might end up being the one they remember the most.
1. Buy a House Early and When They are Cheap:
There are all kinds of negatives about home ownership and we've covered them, tounge in cheek, in Rent vs. Buy: They Both Suck! But if prices are cheap and interest rates are low, buying a home soon after you graduate can make a huge difference. And if interest rates are high, that usually pushes prices down even further. We aren't talking a McMansion here but a simple home with low monthly mortgage payments. Looking back, if I had thought about the length of a mortgage and when I would finally pay it off, I would have been much more eager to get myself a place earlier in life. Every 10 years or so, great opportunities for buying are there and they usually last a few short years. Buy a cheap house in your early to mid twenties and you'll vastly improve your financial fortunes later in life.
2. Fund Your Retirement Early:
There's a simple calculation that I wish I did when I was graduating college. Invest a certain amount of money into your retirement during your twenties and stop when you hit thirty. Compare that to saving nothing in your twenties and investing the same amount of money starting at age 30. On average, you will never have more money for your retirement in the later case! That's the power of Compounding. I didn't start putting away for retirement till later in life and I never caught up. Sure the dinners, drinks and vacations were great but putting away savings early pays off huge in the end.
|
