It’s no surprise that many young professionals today treat financial freedom as a top priority. Given the rate at which the prices of basic goods are rising and lingering economic uncertainty, many in that demographic are looking to do more than just commit to a single income source. Being more well-informed and tech-competent, today’s young people are setting their sights on building wealth as early as possible.
That would explain why a considerable number of individuals belonging to the Gen Z demographic are already investing in equities and other assets. This would be a good indication of how much technology has helped the new generation become more aware of their financial choices, providing enough space for them to explore new paths towards building wealth. However, to thrive as investors, young investors will need to focus on the right strategies. The guide below provides a few tips to help them get started on the path towards their first million.
1. Never rely on trends alone
It’s easy to jump into any bandwagon, especially if you’re new to the world of investing. You would want to be where everyone else is putting their money on. However, relying on popular trends without much analysis is far from being a wise approach towards investing. Keep in mind that investment vehicles that claim to set the shortcuts towards exponential wealth are more likely to die out.
While some may live up to the hype they were built upon, some trends may even lead to more liabilities than profits. As a newcomer, the best piece of advice you could ever receive is to never jump into a trending investment without doing careful research. Tread lightly and always subscribe to the wisdom of those who are more experienced.
2. Keep track of your financial situation
As much as you want to see your investments grow, you wouldn’t want to turn a blind eye to your capacity to keep your assets from dying out. As a young investor, most of your money is sourced from earnings from your day job. It will be difficult to stay on the right track when you’re not in full control of your finances, regardless of how much you’ve saved and spent. Apart from spending within your means, commit to paying off your student loan balances and create a budget that allocates a portion of your earnings towards high-value assets.
3. Spread the risk around
Wise investing is anchored on the ability to gauge your risk tolerance as well as your maturity in choosing assets that are guaranteed to generate stable earnings. Being aggressive in putting all of your resources on a single asset is far from being an effective strategy, especially if such an asset is proven to be highly volatile.
If you want to earn your first million, manage risk effectively by diversifying and rebalancing your portfolio in response to certain disruptions in the economy. Don’t just rely on local equities. Aim to acquire equities from an Australian ETF or add cryptocurrencies into the mix. This allows you to lessen the impact of an underperforming asset, allowing you to stay profitable no matter how volatile things get in the global economy.
Endnote
There’s a lot to gain in today’s economy, only when you’re able to overcome bad advice and dangerous trends. Being young doesn’t mean you can’t become an investor and accomplish all your financial goals. You just have to know how to make the most of the time and resources you have to make the best possible decisions on the road to your first million.
