The 20s are your life’s prime years.
I love my 20s because they have made me who I am today.
Yet, there are many things I wish I understood in my 20s, in particular, the sad truth that, I shouldn’t have spent the money I didn’t have to buy the things I didn’t need to impress the people I didn’t care.
Lucky me, I still manage to have a comfortable life now despite some of my poor financial choices.
But if I could go back in time and give some financial advice to my younger self, it would have been the followings.
1. Pay Yourself First
First of all, time and the power of compounding — two essential factors for wealth creation — are literally on your side in your 20s.
You might be wondering exactly how this is investing, so let me tell you more.
See, investing is not all about directing money to an income-generating activity.
Putting money aside whenever a paycheck comes in is actually investing, in this case, in yourself.
To make it work, you need to commit a certain portion of your money — I recommend more than 10% of your paycheck — to saving, no matter what.
Even if the world is crumbling, that money should just go to your savings account.
This is also your emergency fund, and you should save at least 3–6 months of living expenses.
It might seem challenging, but you can make it easier and seamless by setting up automatic contributions.
This way, before you can think about how to spend that money, it has already left your account.
That’s what I mean by paying yourself first.
An early start in your 20s gives your savings more time to grow and enables you to take advantage of compounding.
Of course, we all know how low the interest rates offered by banks are.
So, I recommend staking stable coins like USDT to earn staking rewards, or interest.
From my observation, the market annual percentage yield (APY) is around 6% (I now use Nexo, which gives even better returns), so it is definitely many times better than the banks’ saving rates.
This is another topic of itself so watch my another video on the topic to learn more.
2. Invest in Stocks
Another tip for investing in your 20s is putting money into stocks.
You have two options here, the first being purchasing individual stocks of companies and the second being purchasing index funds.
I prefer the latter because it allows you to spread your investment across a broad selection of stocks, minimizing your risk.
In fact, I don’t invest in any individual stocks, the energy I need to spend on monitoring their performance and news just does not worth my time.
My favorite are exchange-traded funds (ETF) — the Invesco QQQ, an ETF that tracks the Nasdaq-100 Index, and the S&P 500. There are all great examples of index funds you can buy.
If you need to be convinced on why you need to invest in ETFs, check out my video on “7 reasons you should invest in ETFs.”
And before I forget, hear this.
The trick with investing in index funds is to “buy and hold.”
The market drops from time to time, that’s a part of the market correction.
In fact, when you invest in ETFs, aim to hold them for at least 5 years.
If you have this long-term vision in mind, it will help you be rational when making investment decisions and not to panic-sell when the market declines.
Because after all, that’s just how the market is.
3. Invest in Rental Properties
This is a challenging option in Hong Kong because the property prices are quite crazy here, but it can be a great investment idea if you live it places where properties are more affordable.
What I want to talk about is “house-hacking”, which is essentially using your residence to make money.
Let me tell you about three different ways to achieve house-hacking:
- Purchasing a duplex, triplex, or quadplex, residing in one unit, and renting out the additional unit or units.
- Renting out the extra bedrooms in your house.
- Renting out an extra in a house, say a finished basement, converted garage, in-law suite, guest house, or additional dwelling unit (ADU).
Not to forget, you can also start investing in rental properties in your 20s through real estate investment trusts (REITs).
Or, you can create a fund with people you trust for your acquisition of the rental property, and then share the rental income with the investors of the fund.
4. Start a Business
Launching a business in your 20s is a sure way of becoming rich in your 30s.
The truth is, this is one main reason I haven’t gone broke by my 30 despite my poor financial decisions.
I know you already know this but let me repeat —
You really have no excuse not to start a business in these times because the internet has made things way easier.
You do not have to rent a storefront, hire staff, or operate within conventional business hours like 15 or 20 years ago.
Of course, that means the business you need to start should be mobile or online-based.
When done right, such a business has the potential to generate way more money for you by the time you hit your 30s than any other investment.
I have started many businesses in the past (eyelashes, supplements, handbags etc.), and I was able to earn money here and there.
But interestingly, and I know this is not what you have expected, what entrepreneurship has benefited me the most is the mindset change.
When you start to think from your clients’ or customers’ perspectives, you see the world very differently and you start providing more valuable services and products.
That’s when I started getting promotion after promotion at my day-job.
It follows that, I rediscovered my passion in finance and that’s one of the reasons why I started my YouTube channel and this Medium page (which talk about everything finance).
My another advice is that, try not to go for physical products in your first business launch, because most suppliers, if not all, have a minimum order quantity (MOQ) and for a start-up which won’t be ordering too much, the cost can be unnecessarily high.
Also, the inventory cost can also eat up your margin and give you financial stress (speaking from my experience).
I would suggest you going for service-based businesses, like being a freelancer or a content creator.
Get a feel of how it is like to run a business and expand from there.
And if you want to launch physical products, do that as you are now more ready.
5. Invest in High-Value Skills
After all that I have mentioned, this is the best investment advice I could give, not only to people in their 20s, but in all ages, and that’s education.
Always reinvent yourself by continuing education.
If you are in your 20s, take the time to learn high-value skills with a long-term appeal.
The idea is to master a skill that allows you to earn more than what you have invested in it over time.
I feel that programming, artificial intelligence, and machine learning are examples of great areas to sharpen your skills on.
In fact, even for myself, I plan to learn a bit of coding this year because I know that’s the future.
Final Words
Just to stress all over again, your 20s are an opportunity to set yourself up for a comfortable financial future.
So, if you’ve been thinking of ways to start investing to be rich by 30, there you have it.
But remember, life is not a rat race.
If you are no longer in your 30s and feel like you are too late to the game, don’t be discouraged.
Remember, “The best time to plant a tree was 20 years ago. The second-best time is now.”
Take things slowly, as long as you are taking action.
I hope this article has taught you something. If you have any questions or comments, drop them in the comments section and let’s keep the conversation going!
Btw, I am launching my own NFT collection called Rich Goddess, which you may want to check out. 😉
Also, if you want to learn more about crypto and how to reclaim your financial power, be sure to check out my page / YouTube channel.
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