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Your 20s are a defining decade. It’s the time in your life when you’re starting to figure out what kind of person you want to be, what career you want to pursue, and how much money you should be saving.

In this article, you’ll learn how to invest in your 20s, which is different from how you might invest in other decades of your life.

If you’ve never invested before, investing is very different than simply saving up your extra cash in a savings account. When you invest, you’re putting money in an investment vehicle with the hope that your money invested will grow and compound over time.

There are many types of investments, and some are riskier than others. And the best investments for a 20-year-old are ones that are high risk and high reward because when you’re young, you have more time to make up for any potential losses.

Investing in Your 20s Should Involve Risk

confident young woman on smartphone

Your 20s should involve risk, but not recklessness. Young investors should be willing to take on some risk. That doesn’t mean you should dive in headfirst and invest everything in high-risk stocks, but it does mean that you shouldn’t shy away from investing in riskier options.

When investing in your 20s, go in with the understanding that sometimes things don’t go as planned. Sometimes the market will take a downturn; that comes with the territory when trying to grow wealth over time.

But, it shouldn’t stop you from pursuing investing as a way to establish a positive financial future.

After all, the younger you are, the more time your money has to grow. Additionally, the younger you are, the more time you have to withstand market fluctuations over time.

How to Balance Investing with Student Loan Debt

young female students in the hallway on phone with coffee

Student loan debt is a significant concern for many people in their 20s. The average American has student loans at nearly $40,000.

The good news is that if you have student loan debt, it doesn’t mean you can’t invest. The key is to find a balance between paying off your debt and investing in your future.

The mistake some people make in their 20s is avoiding investing altogether. Some financial experts encourage young people to get out of debt entirely before even considering investing.

However, avoiding investing when you’re young is a mistake because you miss out on the wonders of compound interest. Do not avoid investing just because you have student loan debt.

Instead, develop a plan that allows you to meet your debt obligations while also planning for your financial goals.

Here are a few tips for balancing student loan debt with investing:

  • Create a budget and stick to it. Figure out how much money you can afford to invest each month. Before landing on this number, make sure you first take care of your other expenses (like rent, food, and transportation).
  • Start small. If you’re starting, don’t invest too much money at once. Try allocating $50 or $100 per month until you get the hang of things.
  • Think about your long-term goals. What do you want to achieve in the next five or ten years? Investing can help you get there, but make sure you’re putting your money towards things that will benefit you in the long run, too (like retirement savings).
  • Find a good mentor or source of information. If you’re feeling overwhelmed, it might be helpful to talk to someone who can help you create a plan that works for your unique situation. You don’t necessarily need a financial advisor in your 20s. Still, you can talk to a financial coach, read an investment newsletter, or find an expert you like on social media who gives investment advice relevant to your stage in life.

Establish a Budget that Includes Savings and Contributing to a Retirement Account

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As mentioned, when you’re in your 20s, it’s essential to create a budget that includes your monthly spending, monthly investing allocation, and your plans to save for the future.

You may be wondering how much money you should save or invest each month and where you should put that money.

Here are some tips for investing in your 20s:

  • Look for an employer that offers a 401(k) plan with matching funds. The employer match on a 401(k) plan essentially acts as free money. It’s also the most straightforward way to start investing in your 20s because it comes from your paycheck.
  • Make it automatic. People are successful with employer-sponsored retirement plan options like 401(k) accounts because they don’t have to think about investing. You may have the option to invest in low-cost index funds or target-date funds that provide suitable investment risks and returns for your age. You can do the same thing with other investing accounts, too, by having a portion of your paycheck automatically moved to an account you use for investing.
  • Try contributing at least 15%-25% of your income to investment accounts each month. If you can’t contribute that much, start with a smaller percentage like 5% and gradually increase your contribution as your income grows.

Here are some tips for saving in your 20s:

  • If you don’t have enough money to start investing, try cutting back on your discretionary spending. You can do this by canceling unnecessary subscriptions, spending less on alcohol, or dropping cable.
  • Find ways to increase your income. If you’re working a part-time job on the weekends, try asking for more hours during the week or applying to another position that offers higher pay and better benefits.
  • Create an emergency fund account first. Before you invest, start an emergency fund where you can stash money in case of unexpected expenses like car repairs or medical bills. An emergency fund is essential because it prevents young people from taking out high-interest credit card debt (which could lead to even more significant problems down the line).

Once you’ve established an investment and savings plan, you’ll be well on your way to getting your finances in order.

Related: 13 Best Budgeting Apps for Couples to Grow Together

Where Should I Invest Money in My 20s?

young man on laptop looking up information

Risky assets with high risk-adjusted returns are best for your 20s.

You are young and have the most energy, potential, and time to recoup any losses you may incur in risky investments.

It is also a great time to experiment with riskier assets because of how long you can ride out market swings before making adjustments to your investment portfolio.

Below are a few examples of high-risk, high-return investments that you may want to consider in your 20s:


investing in stocks on smartphone

If you’re looking for high-risk, high-return investments, stocks may be the way to go. Stocks can also be quite volatile, meaning they can quickly go up or down in value.

However, as a young person, you have the potential to ride out stock market volatility because of how much time you have before retirement.

That being said, it’s essential to diversify your stocks across different companies and industries. That way, if one investment goes sour, your other investments can balance each other out (don’t put all of your eggs in one basket).

As a result, you’ll likely be more comfortable taking on some risk if you decide to invest in stocks.

Consider opening an investment account with a company like Betterment. The company invented the robo-advisor or an investing app that automatically invests your money in low-cost index funds aligned with your financial goals.


Real Estate


Another investment option that can offer high returns is investing in real estate. While it’s not as volatile as stocks, real estate is still a risky investment because you can’t always predict real estate market trends.

However, if you can find a suitable property and flip it for a profit, you could see some healthy returns.

Another option is to buy a property and rent it out. Renting out properties can be a solid investment, as you’ll typically see positive cash flow from month to month. However, you’ll need to be prepared for the occasional vacancy or maintenance issue.

Suppose you’re not interested in buying and flipping properties or becoming a landlord. In that case, you could always invest in real estate crowdfunding platforms or REITs.

These are pooled investments that allow you to invest in various properties without having to do all the legwork yourself.

The premier real estate crowdfunding platform is Fundrise. This investment platform allows you to invest in a portfolio of real estate opportunities for as low as $10. Fundrise offers the chance to invest in residential and commercial real estate.

If you’d like a more traditional real estate investment vehicle that hires outside management to vet, purchase and manage properties, consider a private real estate investment (REIT) company like Streitwise.

Since its inception, the service has seen significant investment earnings. It has you share risk with the company’s sponsors, who invest a significant amount of their capital alongside other investors.


The Stock Market is Your Friend

Investing in Individual Stocks


As mentioned, when you buy an individual stock, you’re buying part of a public company. While this is riskier than investing in a mutual fund or index fund, individual stocks have the potential to make you positive returns.

To invest in individual stocks, you’ll need to open a brokerage account. Brokerage accounts allow you to buy and sell stocks, as well as other investments like bonds and mutual funds.

When choosing a brokerage account, it’s essential to consider the fees charged by the company. Some brokerages charge a commission for every trade, while other stock trading platforms have no commission at all.

It would also help to look at the minimum investment required by each brokerage. Some require $500 or more to open an account, while others like Webull will let you start with just no minimums.

Though, if you can make a qualifying deposit, the company offers free stocks to get you started.

Once you’ve opened an account, it’s time to start picking stocks. There are many resources online to help you make informed decisions about which stocks to buy.

Related: Webull Review: A Commission-Free App for Every Trader

Investing in Index Funds


An index fund is a mutual fund or exchange-traded fund that tracks an index, such as the S&P 500 or the Dow Jones Industrial Average.

They’re designed to provide investors with a diversified portfolio, which reduces risk.

The fees associated with index funds are usually lower than those charged by other mutual funds.

Many brokerages offer index funds, and you can buy them directly through the company or a mutual fund provider like Vanguard or Fidelity.

Investing in Exchange-Traded Funds (ETFs)


Exchange-traded funds are similar to a mutual fund, except they can trade during regular market hours on the stock market.

The ability to trade during the market’s regular hours means you can buy and sell ETFs just like individual stocks.

ETFs offer investors a way to diversify their portfolios without needing to buy multiple stocks.

They’re also relatively low-cost, and many brokerages offer commission-free trades for ETFs.

Investing in Mutual Funds in a Retirement Account

young woman with glasses looking on smartphone

If you’re investing for retirement, you may want to consider investing in mutual funds.

Mutual funds are a way to invest your money and have it managed by professionals.

Having this expertise can be a good option for people who don’t have the time or knowledge to manage their investments. You can also buy passive index mutual funds like VTSAX or VFIAX, which track market indexes like the CRSP 5000 or S&P 500, respectively.

Most brokerages offer tax-advantaged retirement accounts that allow you to invest in mutual funds.

Be sure to look at the fees charged by the brokerage, as well as the minimum investment required.

How Can I Invest Aggressively in My 20s?

girl and dad sitting on couch looking at smartphones

There are many different ways to invest your money, and it can be tricky to decide what’s the best option for you. If you’re looking to make more money in your 20s aggressively, there are a few things you should consider.

One option is investing in individual growth stocks selected by an award-winning stock picking service like The Motley Fool.

They have a proven track record of finding stocks that outperform the market, and their analysts can help you make informed decisions about where to invest your money.

Another option is investing using diversified portfolios through a robo-advisor like Betterment. As mentioned earlier, robo-advisors use computer algorithms to create diversified portfolios of low-cost ETFs, and they’re a great way to get started with investing.

Plus, with no account minimums or trading fees, they’re perfect for young investors just starting.

Whatever route you decide to go, be sure to do your stock research and talk to an expert before investing any money. With a little bit of planning and some smart choices, you can put yourself on the path to financial success in your 20s.

Related: 18 Best Stock Market Investing Research & Analysis Sites

At What Age Should You Start Investing?

smiling girl happy on smartphone

There is no set age when you should start investing, but the sooner you start, the better off you’ll generally be. The more time your money has to grow, the more opportunity it will have to compound and build upon itself.

There are a few things to keep in mind when you’re ready to start investing:

  • Start small by investing a little money and gradually increase your investment amount as you become more comfortable with the process.
  • Choose investments that align with your goals, risk tolerance, and time horizon.
  • Eventually, diversify your portfolio across different asset classes to reduce overall risk, including non-stock investments.
  • Keep up with current market trends and make changes to your portfolio as needed.

Should I Use a Financial Advisor?

successful man on phone

At your stage in life, in your 20s, no. Just invest aggressively with low-cost brokerages and useful stock research tools or through a robo-advisor in index funds.

These days, many robo-advisor companies employ financial advisors who can answer any questions you might have while charging minimal management fees.

It may sound intimidating, but the good news is there are tons of resources to help beginning investors get started.

When you’re young, though, a financial advisor is not worth your time or money because you truly can learn how to invest yourself.

There are plenty of ways to invest without a financial advisor if you’re in your 20s, so there’s no need to waste your money on one.

So, try out a robo-advisor and see how it goes. Or use your brokerage account to invest in individual stocks you believe will do well. There’s also real estate, cryptocurrency, and more to consider.

Whichever route you choose, remember that it’s crucial to stay disciplined and keep track of your investments over time. That means revisiting your goals and strategies regularly to ensure you’re still on track.

How Much Money Should You Invest in Your 20s?

When you’re in your 20s, it’s a great time to start investing. You have plenty of time to make up for any losses, and you can afford to take some risks.

However, here are some tips for how much money to invest in your 20s if you’re concerned about poor returns.

  • Start small: $500-$1,000 is plenty to get started with and allows for room for error.
  • Diversify: Don’t put all of your eggs in one basket; your investments should have an asset allocation across different types of stocks, bonds, real estate, etc.
  • Patience: With any investment, you have to be patient.
  • Investing is risky: Don’t invest money you can’t afford to lose.
  • Expect the unexpected: While the stock market typically offers positive returns over long periods, it can have fluctuations day to day and even year to year. Outside forces (like pandemics and recessions) can impact returns in the short term. Still, when you’re young, you can often wait out any stock market dips and enjoy overall returns in the long term.

What is the Best Investment for 20 Year-Olds?

When it comes to investing, there’s no one-size-fits-all answer. You’ll need to figure out what works best for you based on your risk tolerance, financial situation, and personal goals.

However, there are a couple of investments that 20 year-olds should consider. After all, the younger you are, the more aggressive your investment strategy should be.

  • Real Estate: Investing in real estate is an excellent option for young investors because it offers some market stability and income potential.
  • Stocks: With stocks, you’re buying a piece of a company that will have ups and downs but has potential for significant profits if held over the long term.

Of course, the absolute best investment you can make as a 20-year-old is an investment in yourself.

If you’re an entrepreneur, start investing time and effort into your business while you’re young and before you have significant responsibilities (like starting a family.)

If you have a side-hustle or passion project, put some of your time, income, and passion towards that. You never know where it will lead or when a part-time gig can before a full-time job.

Starting your own business gives you the potential to make a lot of money. It could enable you to control your destiny completely.

Of course, there are no guarantees in life, but above all, definitely consider investing in yourself, whether it’s through your education, your own business, or your mental health.

No matter what option you choose, remember that any investing takes knowledge, time, and patience, so be prepared to ride out any bumps along the way. The most important thing is to start early – right now – and stay consistent.


About the Author

Riley Adams is the Founder and CEO of Young and the Invested. He is a licensed CPA who worked at Google as a Senior Financial Analyst overseeing advertising incentive programs for the company’s largest advertising partners and agencies. Previously, he worked as a utility regulatory strategy analyst at Entergy Corporation for six years in New Orleans.

His work has appeared in major publications like Kiplinger, MarketWatch, MSN, TurboTax, Nasdaq, Yahoo! Finance, The Globe and Mail, and CNBC’s Acorns. Riley currently holds areas of expertise in investing, taxes, real estate, cryptocurrencies and personal finance where he has been cited as an authoritative source in outlets like CNBC, Time, NBC News, APM’s Marketplace, HuffPost, Business Insider, Slate, NerdWallet, Investopedia, The Balance and Fast Company.

Riley holds a Masters of Science in Applied Economics and Demography from Pennsylvania State University and a Bachelor of Arts in Economics and Bachelor of Science in Business Administration and Finance from Centenary College of Louisiana.