Investing in Your 20s and 30s: Consider Your Investment Options and Desires

By Eric Tyson

Many good investing choices exist: You can invest in real estate, the stock market, mutual funds, exchange-traded funds, or your own business or someone else’s. Or you can pay down debts such as on your student loans, credit cards, auto loan, or mortgage debt more quickly.

What makes sense for you depends on your goals as well as your personal preferences. If you detest risk-taking and volatile investments, paying down some debts, may make better sense than investing in the stock market.

To determine your general investment desires, think about how you would deal with an investment that plunges 20 percent, 40 percent, or more in a few years or less. Some aggressive investments can fall fast. You shouldn’t go into the stock market, real estate, or small-business investment arena if such a drop is likely to cause you to sell or make you a miserable wreck. If you haven’t tried riskier investments yet, you may want to experiment a bit to see how you feel with your money invested in them.

A simple way to mask the risk of volatile investments is to diversify your portfolio — that is, put your money into different investments. Not watching prices too closely helps, too; that’s one of the reasons why real estate investors are less likely to bail out when the market declines. Unfortunately (from my perspective), stock market investors can get daily and even minute-by-minute price updates. Add that fact to the quick phone call, click of your computer mouse, or tap on your smartphone that it takes to dump a stock or fund in a flash, and you have all the ingredients for shortsighted investing — and potential financial disaster.

Making investing decisions and determining your likes and dislikes is challenging when you consider just your own concerns. When you have to consider someone else, dealing with these issues becomes doubly hard, given the typically different money personalities and emotions that come into play. In most couples, usually one person takes primary responsibility for managing the household finances, including investments. The couples that do the best job with their investments are those who communicate well, plan ahead, and compromise.

For many couples, the biggest step is making the time to discuss their financial management, whether as a couple or working with an advisor or counselor. The key to success is taking the time for each person to explain his or her different point of view and then offer compromises. So be sure to make time to discuss your points of view or hire a financial advisor or psychologist/marriage counselor to help you deal with these issues and differences.