Guide to Investing in Your 20s

Laying the groundwork for a lifelong investment strategy

Young man in front of a blackboard with financial notes on itYou have finally graduated college and, after finally finding a full-time job, can start paying back those student loans. Retirement seems like it is in the distant future and you are more concerned with living paycheck to paycheck. But it is never too early to start preparing for your future by establishing sound financial footing and taking early investment steps.

Save money
The first step to investing is to align your spending habits with your investment plans by carving out a chunk of every paycheck for savings. While you might not feel that you have the current flexibility to put away any money, the earlier you make saving an uncompromisable habit, the easier it will be to increase your investments long-term.

According to Charles Schwab Foundation president Carrie Schwab-Pomerantz in an interview with Forbes, people in their 20s should be budgeting for and saving at least 10 percent of their annual income. While this may seem excessive, the more you have saved early on, the more it will compound over the next 50 years. Not to mention, it is a solid step to increasing your savings rate to 20 percent in your 30s.

Pay off your debts
Get out from underneath the oppressive thumb of student loan and credit card debt as quickly as possible by establishing an aggressive debt repayment plan. According to Stacy Rapacon of Kiplinger, the longer you let debt linger, the further it will set your finances back in the form of greater interest payments and lower credit scores. The sooner you repay your debts and free yourself from crippling interest payments, the more money you’ll have to invest in your future.

Fund your retirement
It is never too early to start setting aside money in your retirement fund, especially since the years will only compound how much you will have in your account by the time you retire. Rapacon of Kiplinger calculates that if you invest $100 a month as a 25-year-old, assuming an 8 percent return and quarterly compounding, you’ll have around $346,000 by the time you turn 65.

Investing money in a retirement fund now is even more essential because of your employer’s matching program. Arielle O’Shea of NerdWallet highly suggests taking advantage of your employer’s generosity by contributing to any available retirement plan, such as a 401k, especially if your employer offers a matching percentage.

If you don’t have access to a company-based 401k, Forbes’ Samantha Sharf recommends investigating the option of starting a Roth IRA or Roth 401k that taxes your contributions now but lets those contributions grow tax-free for the rest of your lifetime.

Take risks
Those who do invest in their 20s often do so conservatively because they don’t want to see any of their hard-earned money lost, but that also limits the potential for their investments to grow. According to O’Shea, “Many millennial investors make the mistake of avoiding risk even though it helps them over a long timeframe.” Thus, to reach your target retirement financial goals, it is important to allocate much of your portfolio to stocks over bonds. While there may be more short-term drops, Vanguard analyses show that it is the way to get a better lifelong annual return.

Get advice
If you are not sure what the best investment options are for you, or would like additional clarification on what investing involves, it never hurts to ask for advice from an advisor who can help you map out a financial plan that spans. O’Shea of Nerdwallet recommends even opening an account with a robo-advisor that will give you basic insights into your current plan and offer advice on the next steps.

Your gut feeling may be to wait to invest and spend your money elsewhere while you are young, but the more aggressively you save and invest your income now, the better prepared you will be for retirement.

Used with Permission. Published by IMN Bank Adviser Includes copyrighted material of IMakeNews, Inc. and its suppliers.

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Pros and Cons of Living at Home During College

Staying at home during college provides numerous costs and benefits

Young black girl on her bed studying When people describe the typical college experience, it usually involves living on campus in a dorm. Many colleges actually require students to live in dorms for their first two years, unless they commute. After moving out of the dorms, many students often move into a nearby apartment during their junior and senior years.

However, the quintessential college experience is changing. In fact, according to a report from Forbes, 54 percent of students now choose to live at home during their college years. Whereas living at home was seen as a rarity in the past, it is now rather commonplace. University students have come to recognize the various benefits that living at home provides them during their college career.

Of course, living at home does come with its drawbacks as well. Each student must weigh out the costs and benefits of choosing to live at home while attending college to determine which path is right for them.

Benefits of living at home

The most obvious benefit of living at home, and the number one reason why students choose to do so, is cutting costs. Amy Diluna of NBC News reports that students can save around $10,000 a year by commuting from home, depending on what college they attend. With each passing year, college grows more expensive and many students are forced to rely upon loans to pay for their education. Room and board will only add to the climbing amount of debt that students acquire by the end of their academic journey.

Beyond room and board, living at home can save students money in other ways. Doing laundry will likely be a much simpler and less expensive task while meals will probably cost less as well. Living at home carries more than just financial benefits. Staying with family can often provide students with a social support system, according to Kate Ashford of Forbes. College can often be a tough time of transition for many students and living away from home can make them feel isolated. Living at home often eliminates much of that isolation.

Drawbacks of living at home

Living at home might eliminate the distractions of those late-night parties, but it will also reduce the number of social gatherings and events for students as a whole. NBC News’ Amy Diluna explains that many students that live at home can feel like social outsiders, due to their reduced presence on campus. Students who commute are less likely to join clubs and activities than those who choose to live on campus.

Living away from campus doesn’t just make socializing with other students harder. It also makes working with them harder. Diluna also notes that scheduling group projects can be more difficult when one student lives farther from campus. The distance between where students live and where they go to school can often land them with a long and arduous commute. Said commute can drain students of energy or even cost them a hefty fee in terms of gas money, according to Susannah Snider of U.S. News & World Report.

Furthermore, commuting to school and living at home only works if the university that students are interested in attending is in the same vicinity as their family home. If students truly want to live at home during college, then it can greatly reduce the number of universities where they can feasibly enroll. Needless to say, the decision to live at home also depends on how strong the relationship is between students and their family members. Many students will pursue the independence that living away from home provides, even if it may cost them more in the long run.

Used with Permission. Published by IMN Bank Adviser Includes copyrighted material of IMakeNews, Inc. and its suppliers.

Holiday Shopping on a Budget

Tips to limit what you spend on gifts this season

Woman holiday shopping online using a laptop and a credit cardThe holidays should be time for celebration and generosity, not for accumulating credit card debt and draining your savings. By sticking to a budget and following these simple strategies, you can bestow meaningful gifts while staying within your financial means.

Create a budget
Donna Montaldo, contributor to TheBalance.com, advises that you make a spending budget before the holiday season hits. Make this an informed amount, based on what you can truly afford to pay.

Make a list
Maya Kachroo-Levine, contributor to Forbes.com, suggests making a list of everyone you want to buy presents for along with a certain amount you should spend on each person. This will help you stay within your allotted budget.

Avoid using credit cards
Montaldo recommends leaving your credit cards at home to avoid racking up debt while shopping. Mellody Hobson, writer for ABC News, recommends using your debit card instead. This way, you won’t be tempted to spend beyond your means and you won’t have to pay interest on your purchases.

Start saving early
Kachroo-Levine advises starting a holiday spending fund as early as possible so that when the holidays approach, you will already have a surplus to tap into. Consider setting aside $30 a week starting two to three months before the holidays.

Compare prices
Hobson suggests that you research prices before purchasing any gift. If you’re shopping in person, use your phone to check online to see if there’s a discounted price if you order an item online. You can also check prices of that item at similar stores.

Re-gifting
Another affordable option to stay within your budget this holiday is to re-gift an item that you received but don’t use or need, explains Montaldo. Make sure the gift is new and wrap it in an attractive package to give it a fresh look.

Go homemade
Browse ideas on Pinterest and others websites for simple gifts that you can make yourself. Montaldo suggests visiting the dollar store to purchase candy or nuts that you can package in mason jars and wrap with festive bows. Handmade items such as cookies or homemade bath salts are two additional ideas great for teachers and coworkers.

Rethink gifts for your partner
It can be easy to overspend on the people closest to you, particularly your spouse or significant other. Kachroo-Levine recommends setting money aside earlier in the year to purchase a high-cost experience or household item that you both have been wanting. Another great idea is to give your partner the gift of quality time this year, to avoid focusing on material possessions as gifts.

Amp up your gift’s appearance
Montaldo advises enhancing the visual appearance of your present by investing in quality gift wrap, ribbons, bows and accessories. You can also add a personal touch by making your own gift wrap, following do-it-yourself instructions on sites like Pinterest and Instructables.

Say “no” to holiday guilt
A thoughtful gift doesn’t necessarily mean an expensive one. Also, you don’t have to buy an item for every coworker and acquaintance you know, explains Kachroo-Levine.

Stay within your budget by applying these practical suggestions for giving affordable holiday gifts this season.

Used with Permission. Published by IMN Bank Adviser Includes copyrighted material of IMakeNews, Inc. and its suppliers.

Security Warning Signs When Shopping Online

Remove the stress from shopping online by following these key shopping safety tips

Young woman shopping on a laptop while holding a credit card It’s an undeniable fact that many people shop online, either for personal shopping or gift giving. Companies like Amazon and Etsy have built modern empires out of their online operations. With each passing year, more and more brick and mortar stores close their doors. With all of these shopping venues shutting down, the variety of online shopping sites has only grown more diverse.

But for every trusted online retailer out there, there is a different website that is certainly not as safe or secure. Online security is always something to be concerned about, and this is even truer when money is involved. Keep an eye out for these warning signs and how to respond to them in an appropriate way.

Warning signs to check for
With the growing number of online shopping websites, there are guaranteed to be some bad eggs in the bunch. Shoppers might find themselves deceived and robbed if they aren’t careful. Even though the venue is online, most reputable online websites have both a physical address and a phone number according to Norton Security’s Mary O. Foley. If a site lacks either of these, then it might be one to avoid.

Pop-up ads are another red flag for shoppers. Not only are they annoying, they might also indicate that a particular site is not the best in terms of online security. Another sign of a scam would be extremely low prices. If the prices on a certain website seem too good to be true, the BBC’s website warns that they probably are. The easiest way to make sure that a website is safe, however, is to use the internet itself. A simple web search might yield the answer as to whether or not a shopping venue is legitimate.

Ways to pay safely
Even with these warning signs in mind, it can still be easy for online shoppers to fall prey to a trap on the internet. As important as preparation leading up to a purchase is, how someone actually goes about shopping and paying online is just as critical, if not more so. It might be tempting to purchase a product while out and about, relying upon a Wi-Fi hotspot for an internet connection. However, Elizabeth Weise of USA Today warns that hackers often monitor public connections, meaning that waiting to shop until you get home is the safer bet.

As is the case for all online activities, you will want to make sure that your passwords are rigorous without being complicated. That way hackers won’t be able to guess your password, but you won’t forget what it is, either. Similar to certain transactions offline, using a credit card is more advisable than using a debit card when it comes to shopping online. Paying with a debit card can lead hackers straight to a banking account, putting your money at greater risk.

After a purchase is made, it is vital to still practice your due diligence when it comes to protecting your cash. Eric Griffith of PC Magazine states that shoppers should not wait until their monthly bank statement arrives to check and see if something is amiss. Instead, they should check their banking accounts online on a consistent basis.

Shopping online can be a very enjoyable activity. With these tips in mind, you can remove a lot of stress from the entire online experience.

Used with Permission. Published by IMN Bank Adviser Includes copyrighted material of IMakeNews, Inc. and its suppliers.