Young people are often accused of having bad financial habits. However, data shows that many 20-somethings already practice healthy spending habits. Euronews has spoken to some financial experts to give us their opinion on the best way to invest.
According to the ‘Hargreaves Lansdown’ Savings and Resilience Barometer, it is estimated that 30% of young people between 20 and 24 years old They have savings “just in case”and that figure rises to 53% in the case of young people between 25 and 29 years old.
This is so even though Twenty-somethings only have about €12 (£10) a month of their income left to savewhile those who have between 25 and 29 years old have about 95 euros (81 pounds) per monthEmma Wall, head of investment research and analysis at Hargreaves Lansdown, explained to ‘Euronews’.
However, creating a financial plan It may seem intimidating at a young age, but it is possible.
Plan ahead for the future
Behavioral economics is a term that is worth knowing. It refers to what comes into play when you make financial decisions. For example, it suggests that it is much more likely that Most people gravitate toward their current needs rather than focusing on future needs.how to invest for retirement.
Hargreaves Lansdown personal finance manager Sarah Coles says: “Fear not. With a little planning, you don’t have to sacrifice everything for your future. In your 20s you have time on your side and the power of compound interest that you can take advantage of.”
Essentially, this means allowing time for your money to grow.
Coles also noted that it is important Carefully evaluate any investmentsince they all carry risks and there is no promise of great returns.
Historically, the investment returns They are better than those of cash deposits. However, savings accounts They are also necessary for short-term goals, such as vacations or unexpected bills.
Coles also emphasizes the importance of having enough cash to cover at least three months of essential expensesin other words, having enough money set aside to stay afloat in times of financial trouble.
“Domiciliating your payroll means not having to remember to prioritize financial health each month. Most platforms allow you to establish a regular investment plan from just €28 (£25) a month,” adds Sarah Coles.
What investments should 20-somethings look for?
If you are at the beginning of your investing journey, it can be difficult to identify where to start. A vital component of the investment process is Learn about the different types of investments and what best fits your financial goals and current circumstances.
When you cross the 20 years, you are in an accumulation phase: you take money from investments and pay for them, instead of depending on them for income in retirement. Having said that, you have a long term opportunitymeaning you have time to build your financial portfolio, which is essentially made up of a collection of all your financial assets, such as bonds, Actionsshares and raw materials.
Emma Wall, of ‘Hargreaves Lansdown’, thinks that “andBetween 80 and 100% of your portfolio should be in equitieswith approximately half of this allocation in US stocks, another 10% in British stocks, 10% in Europe, 5% in Japan and the remainder in emerging markets.”
Another option suggested by Emma Wall could be buy a single fund that is a combination of cash, stocks and bonds in a single investment.
Current investment trends for 20-somethings
With constant technological innovation and growth of ‘finfluencers’ On social media platforms, many young people find it much easier to access financial information and investment opportunities.
According to an opinion survey of 2,000 people for ‘Hargreaves Lansdown’, around 21% of investors aged between 18 and 34 receive market forecasts and Instagram stock advice16% lean toward Facebook looking for financial advice, 14% were inspired by Reddit and 8% resorted to TikTok.
According to Naeem Aslam, Chief Investment Officer at Zaye Capital Markets: “While Generation Z may believe that there are numerous free and open resources at their disposal to obtain useful information for their investment decisions, which is often in line with reality, It is crucial to recognize that experience is the most valuable factor“.
“What we mean by this is that a financial advisorhaving seen similar situations before, would have better experience in investing, diversifying the available capital and producing a significantly higher return.”
ADVERTISINGIn essence, seeking out financial information at any age is a good idea, but be sure to treat it with caution, especially if it comes from unregulated sources, where you will have no protection if something goes wrong. It is also important toAllow time to verify information or conduct additional research about any new ideas you have discovered. It is always best to consult with a financial professional before making hasty decisions.
We remind you that the information contained in this article does not constitute financial advice; Always do your own research to make sure it fits your specific circumstances. Please also remember that we are a journalism website and our aim is to provide the best guides, advice and expert advice. If you rely on the information on this page, you do so at your own risk.
