Should you invest in the stock market in your 20s? Is it worth risking your money at this age?
I really wanted to cover stock market investing in your 20s on Studenomics for a long time now. Everyone knows a know who knows a guy who made it big in stocks.
If you’re out of college and making real money for the first time, you’re likely thinking about what to do with your money. If you read our tips on stock market basics the other day, then you might be curious about finally getting started in the stock market. I have a strong feeling that you’re debating if you should start investing in the stock market, but you just don’t know if it’s the right move for you at this point.
I hope to make this decision easier for you today. I want to look at what your decision on investing in the stock market should depend on.
What does investing in the stock market depend on?
Whether you get into the stock market or not depends on your level of risk tolerance. Can you handle risk? Can you sleep at night knowing that you lost some money during the day? Can you handle the market swings? Can you handle the risk of losing your savings?
Simply put, getting involved in the stock market isn’t for those that can’t handle risk. I learned this about the stock market the hard way the first time around. I worked all summer after grade ten and then put all of my savings towards the stock market. I thought I was the smarted guy in the world because I had my money in the stock market. I thought I was going to get rich. Then I saw that my stock dropped and I lost half of my savings.
I didn’t run away from stocks right at that point, but I learned that I definitely didn’t have the guts to take big risks with my money. I also learned that I especially hated taking risks when I had to mow lawns for $7/hour to make money.
This leads into my next point on stock market investing in your 20s.
There are many success stories about the stock market.
For some odd reason, success stories about hitting it big in the stock market get out and 20-somethings get all excited about the idea of investing in the stock market once they get some money in the bank. There are also many guides out there on how to play the stock market.
I’m not going to promote any stock market success stories because truthfully more young investors get played by the stock market. I want to warn you right now that if you buy a stock there’s no guarantee that the price is going to go up just because of what some “expert” on the news or the guy at the gym said.
I covered how the stock market works in the past, so I won’t go over the same details again. You can check out that post for more information.
What if you want to invest in the stock market right now?
If you want to get started you can create an account with an online stock broker (listed below). The sign up process shouldn’t take long at all. Once you sign up with the stock broker, you just need to setup your banking infrastructure so that you can transfer money between the accounts. The process is a one time sign up that might take a few minutes. Once you’re started with your account, you can start buying and selling stocks.
Before you sign up with an online stock broker and start investing your money, I urge you to conduct further research. You work hard for your money. I don’t want to see you get convinced to jump on some “hot” stock pick that ends up being a complete flop.
I hope that by this point you’re not worried about understanding the stock market. Deciding to invest in the stock market in your 20s is a big move. Are you ready?