If you’re in your teens or early twenties, you may think investing should be put off until later. The truth is the majority of today’s youth have already started investing. In fact, Gen Z is more likely to invest in stocks than millennials and baby boomers.

From doing due diligence to actually getting your hands wet with investing, you can learn essential strategies to help you start building your portfolios today. Read on to explore some investment opportunities you can take advantage of now to put yourself in a better financial position for the future.

Choose Your Investments

It’s so easy to check out a stock guru’s top choices on TikTok, but that’s not always the most reliable source of insight. Do your research to have both short and long-term growth. There are six types of investment opportunities you may want to add to your portfolio:

Compound Interest

Compound interest accumulates on both your principal investment and any earned interest - essentially, you make money on top of your assets over time. This allows you to enjoy the benefits of a more significant return after a few years.

401(k)

A 401(k) is a type of retirement plan typically offered by employers as part of their employee benefits packages. When you sign up for a 401(k), you make monthly contributions from your paycheck. The money you contribute is then invested in various options, like stock funds and bonds, that carry varying risk and reward potential levels.

One great perk of investing in a 401(k) is that many employers offer matching contributions – so when you contribute to your plan, they will match this up to certain limits, which vary from employer to employer. For example, if your employer offers a 3% matching contribution and you contribute 3%, they will match those funds dollar for dollar, essentially doubling your money!

HSA

Health Savings Accounts (HSA) are tax-advantaged accounts that allow you to save pre-tax dollars for future qualified medical expenses, allowing you to keep more of your hard-earned money. Additionally, HSA funds can be invested into mutual funds, letting you to grow your savings and make the most of your money. When it comes time for retirement, you'll already have a sizable sum of money at your disposal.

Mutual Funds

Mutual funds are an excellent option for teens and young people who want to diversify their portfolios without putting too much money into individual investments. Mutual funds pool together money from many different investors, so each owns shares of the fund instead of buying stocks or bonds individually. That means you can gain exposure to hundreds or even thousands of investments within one fund, which reduces risk.

ETFs

Exchange Traded Funds (ETFs) are similar to mutual funds in that they track an index or sector. But unlike mutual funds, they usually trade throughout the day like individual stocks and have lower fees. However, they also require more research since you’ll need to know what type of index or sector the ETF tracks before investing in it. ETFs can be a great way for young people to get exposure to specific markets without buying individual stocks or bonds.

Robo Advisors & Online Brokerages

Platforms such as Acorns and Robinhood have become more popular, especially among Gen Z. They offer a variety of benefits for young investors. With low fees, automated portfolio management, and fractional shares, these services are attractive for those just starting out in the world of investing. However, investors should keep several safety precautions in mind before investing with an online brokerage.

Start Small and Start Now

By investing now, even with small amounts of money, you are taking advantage of compounding returns over time. Ensure you start with a small amount and put it towards low-risk securities like blue chip stocks or bonds.

With the current market volatility, it can be tempting to try and “go big” by investing large amounts of money in high-risk investments like penny stocks or cryptocurrency. While these may offer higher returns than traditional investments, they also carry much higher risks. Starting as small and as early as possible will help you develop essential skills without suffering significant losses if things don’t go as planned.

Make A Plan

When investing, it’s best to have a proper plan to protect your money. Creating an investment plan can help you decide how much you should invest to reach your financial goals without depleting your resources. An investing plan includes budgeting and devoting funds to various assets. Setting limits on short-term and long-term investments can help you stay accountable and aware of the progress toward building wealth. Ultimately, having a plan lets you control possible risks you might encounter along the way.

Conclusion

Gen Zers have the opportunity to start investing and creating financial security much earlier than previous generations did. While it may sound intimidating or complicated, with the right tools and knowledge, investing can be pretty straightforward - and potentially very successful! So, be sure to research and understand the different options available to you. Then, create a plan that will help you reach your financial goals. With a little effort and patience, you can be well on your way to a bright future.