A Guide for Young Investors

Age is a key consideration with an investment strategy, especially when it comes to how much, and when, a younger investor should contribute to have a retirement savings plan.

“We believe that it’s never too early to start investing in your future,” says Dennis Tew, chief financial officer at Franklin Templeton Investments Corp. “Sometimes there’s a tendency to wait and forgo contributing when we’re young due to other priorities – families, mortgages, weddings – but, in fact, it should always be a priority. Even a small amount each year can make a difference over a lifetime.”

For the young investor looking to make their first investment this coming new year, Tew offers these three tips to help make the decision a smart one:

• Understand risk tolerance – To put it simply, do you prefer growing retirement savings plan steadily over time (lower-to-medium risk) or are you okay with the possibility of more investment volatility in the pursuit of larger gains (higher risk)?

• Diversify across asset classes – Make sure you understand the basics about the main asset classes in which you can invest: Bonds don’t necessarily mean safe and equities don’t necessarily mean risky. Why not diversify your investments?

• Speak with an advisor – Investment advisors have their fingers on the pulse of markets and can help you map out a plan for achieving your retirement goals. They can provide insights that are in line with your personal risk tolerance and investment goals.
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Image credit: www.younginvestors.com.my