What are the 5 best investments for young people? With time on their side, the young can afford a healthy amount of risk. With a relatively low savings to work with, too many fees and high minimums are out of the question. Young people should strive for diverse, strong investments to develop the foundation of a portfolio.
- Every young person should invest in an IRA. Whether a traditional or Roth IRA, these individual retirement accounts are one of the best investments because of security, stability, and minimal taxable interest. Young people opening an account will be in a solid position financially ten years in the future, even with monthly contributions as low as $50 dollars.
- Equity mutual funds are one of the best investments. Why should young people invest in equity mutual funds? Because they come with some degree of risk, along with stability. This type of fund focuses on a pool of stocks, secured by the diversity of the investments. The goal is long-term growth and some income. Look for equity funds with manageable fees.
- Treasury bonds. Government issued sovereigns are definitely one of the five best investments for young people. Growth may be slow, but it is very secure. These can be cashed in ten or twelve years down the road when it is time to buy a house, or finish paying off a college loan.
- Green funds. Young people should invest some money in environmentally-friendly companies. Money is power, and directing investments towards socially-conscious companies will encourage a better future. Green funds are also likely to do very well financially as the green business trend continues.
- Invest in CD's. Put savings that would otherwise sit in a bank account in a certificate of deposit. These are some of the best investments for young people and offer a relatively good interest rate, complete security, and control over when the money will be available for withdrawal.
Investing while young is a great way to get a financial head start. These are the five best investments for young people because they combine risk and security to create a balance of great potential and great stability.