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1/14/09

Financial Planning in Your Twenties

If you are in your twenties, the good news is that you have a lot of time before retirement and thus, you can build a very large retirement account and/or savings "nest egg." The bad news about being in your twenties is that you may not have yet reached an extremely high paying position in your career and thus, you may not have a lot of capital with which to invest. Therefore, your financial plan may have to be progressive to compensate for your current financial condition. When I say "progressive," I mean that as you get older or as you earn more money, you should invest more dollars because more may become available.

Being in your twenties also creates the dilemma of split priorities. Basically, you have to strike the delicate balance of saving enough money for the future but not saving too much such that it interferes with your ability to address present financial concerns. If you are in your twenties, chances are that you have just graduated from college (if you went to college), may be thinking of graduate school, may be in the market to buy a home, may be in the market to buy a car, may be getting married, or may be starting a family, to name a few. As such, all of these things require a lot of money. Therefore, you should be concerned about these expenses.

As stated above, because you are in your twenties, you have a long time before you retire (under the traditional model) and thus, because you have a lot of time to profit from investments, your investment strategy for retirement should be pretty aggressive. The theory behind such a strategy is that being aggressive now will give you the opportunity to make a large profit. However, should you lose money, because you are so young, you will have more than enough time to recover any losses. Additionally, as you age, you should move your investments into less aggressive stocks because as you age, your focus should be to maintain you current profit levels and to receive consistent returns.

If you are not sure how to start or what to do, talk to a professional. There are many competent financial planners out there that can help you obtain and maintain a winning strategy for short and long term growth based upon your goals. Therefore, find one today to help you take the steps toward financial security.

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