Wednesday, September 29, 2021
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Best Assets to Buy in Your 20s

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If you're looking to make more money and grow your wealth there are many assets you can buy.

From real estate to the stock market – finding the best assets to buy in your 20s can be easier said than done.

In this post, I'll explore the best assets to buy in your 20s, how much money you can make from your investments, and other finance tips you should follow in your 20s. Let's get started!

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Top Assets to Buy in your 20s

Below are some of the best income producing assets to buy in your 20s. It's hard to go wrong with the options on this list. If you want to make more money, pay off student loan debt, or boost your retirement savings purchasing assets that provide you income each month is an excellent idea.

Index Funds Investing

Index Funds

Index funds are an excellent choice to grow your investment portfolio and retirement account.

Anytime you invest in the stock market you'll want to diversify you investments and that's exactly what an index fund does.

An index fund is essentially a group of stocks that are packaged together so you can easily buy and sell them.

Past performance of index funds are quite strong. It's common to receive anywhere from 7% to 10% annually from your investments with an index fund.

If you're looking to start investing and don't want to do a ton of research, investing in a simple index fund is a great option.

Did I mention many index funds have a low expense ratio meaning your investments won't be crippled by fees.

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Dividend Stocks

Dividend stocks can be a great investment for young investors looking to build wealth. These investments have a strong track record of returns and they are great assets to buy at any age.

I love the income predictability of dividend stocks. Most of these stocks have a history of paying dividends that is easy to track and predict. This can help you to understand your future income from your investments.

Most investors fail to realize the amount of money you can make with dividend stocks.

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Related: How to Invest and Make Money Fast

Commercial Real Estate

Crowdfunded Real Estate

If you want to invest in real estate but you don't have a significant amount of cash to get started, using crowdfunded real estate can be a great way to start investing.

Platforms like Fundrise or PeerStreet allow you to purchase real estate assets collectively with other investors and benefit from the income is generates.

The investment returns from crowdfunded real estate can be inline with other types of investing like the stock market.

The major advantage of using crowdfunded money is that you aren't limited to residential real estate. You can also invest in commercial real estate to increase your investment earnings.

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Websites

This alternative investment often gets overlooked by most investors for one main reason: they don't know enough about it.

Websites can make a significant income each month and it can become a passive venture overtime.

Another benefits of investing in websites is the ability for almost anyone with an internet connection and computer to make money online.

Many website portfolios bring in a monthly payment of over $5,000 in profits for owners. Outside of the monthly income they can make, they will also gain value based on their income. This means that you can potentially sell your websites for a nice profit in the future (but remember the capital gains that come with it!)

Want to learn more about making money with websites? Check out my posts on digital real estate, how to start a blog, and the types of blogs that make money!

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Real Estate Investment Trusts

One of the easiest assets to buy in your 20s is a real estate investment trust. Just like with crowdfunded real estate – this method of investing allows you to grow your money without the headache and stress of owning a rental property.

Real estate investment trusts are some of the best assets you can own and are highly recommended by many personal finance experts.

These assets own a variety of commercial and residential properties that allow you to have risk adjusted returns that are higher than other types of investments.

Related: Best Real Estate Investing Apps

Rental Property

Rental Properties

On of my all time favorite assets is real estate for numerous reasons.

Real estate can make money and increase in value through a few main methods: rental income, appreciation, and rental appreciation.

To start investing in rental properties, you'll need to have your finances in a solid place. If you're planning on getting an investment mortgage, you'll need to have 20% of your loan for a down payment and also have the income to afford the rental home when it's not being rented.

Don't forget about the expenses a rental home can cost, however. Whenever you analyze a potential deal, you'll want to think about costs like property management, repairs, vacancy costs, and other expenses that come with owning a home.

For example, if you find a home that will cost you $1,000 a month and you believe you can rent it for $1,300 a month – you might be lucky to break even after the costs listed above. However, if your home costs $750 a month and you can rent it out for $1,300 you should have no problem cash flowing each month.

Real estate is one of the best asset classes you can buy at any age.

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Social Media Accounts

Another alternative investment that I think will be a strong investment for the future is social media accounts. As the internet continues to evolve and brands look for ways to connect with their audience, social media can become more and more valuable and a great way to make money.

Related: How to Make Money on Autopilot

A Business

While there are many assets to buy in your 20s that can be easily bought or sold, a business is slightly more unique.

While you can purchase a business that is for sale, it can be quite expensive.

Instead, starting a business can be a better investment of your time and money – but it's not always easy.

Starting and growing a successful business will require a unique combination of skills and hard work – and there's no guarantees.

On the bright side, businesses can make millions of dollars each year and make you a millionaire. Depending on the size of your business, it can easily replace your typical job.

You might be thinking to yourself “But I don't have a great idea!”

But you don't need to have the next big idea to start a successful business. There are many small businesses that can make a fortune by completing tasks that are needed routinely.

Think about a service business like lawn care. While the competition is stiff, it's possible to make well over 6 figures from your business by completing weekly mowings, landscape work, and much more.

You won't find starting a business in most pieces of investment advice but I believe it can be one of the best assets to buy in your 20s and beyond.

Retirement Accounts

Retirement accounts like a 401k or IRA can be some of the best investments early on in your career. If you work for a company that offers a retirement plan it's wise to start investing into these tax advantaged accounts as soon as possible.

If the company you work for offers any kind of match – not investing will be leaving free money on the table.

A tax advantaged retirement account like a Roth IRA can be one of the best assets to own and it's a great low risk investment. You won't have to worry about portfolio volatility quite as much compared to investing directly into a taxable account with individual stocks.

Having a retirement plan is one of the principles many personal finance and financial literacy experts rave about – and for good reason.

By having a retirement plan and making routine retirement plan contributions you can create a more secure financial future.

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Education and Knowledge

At a younger age, your education and knowledge is more valuable as it will compound your earnings over time.

Becoming more educated typically means you'll have a higher income job.

For example, learning how to code can bring a plethora of opportunities to make money like building websites for others or teaching others to code.

Growing your knowledge is a great way to make more money – but it comes at a cost.

You'll typically have to pay for your education (and sometimes it can be extremely expensive) but you don't always have to.

There are many online platforms like YouTube and SkillShare you can use to learn skills completely free of charge. While you won't receive a diploma or certificate, it can give you all of the skills you need to thrive.

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Primary Home

A home is likely the first piece of real estate you'll own – and it can be one of the most powerful also.

By purchasing a primary residence that isn't overly expensive, you can start to sell the value that real estate provides.

As you pay down your mortgage you will build equity in the home and it will likely also appreciate in value.

For example, if you purchase a home for $200,000 – a few years later it might be worth $210,000. By that time, your mortgage might only be $195,000. You just built $15,000 of equity in just a few years time. Not too bad!

But there are plenty of expenses that come with owning a home. Between home repairs like a new roof, HVAC unit, landscaping, and other random expenses, it can be somewhat expensive to own a home. It's still arguably a strong investment to grow your money, however.

But your home is more than an investment. It is also a place to live and grow your personal life. Even if your home decreased in value, many people would still want to own it because of the memories made in the house.

Purchasing a home is one of the best assets to buy in your 20s.

Finance Tips for People in Their 20s

There are many financial decisions you should avoid in your 20s. Below are some tips to help you make the best decisions to save money, reach financial freedom, and grow your financial knowledge.

Avoid Lifestyle Creep

In your 20s you're likely to get a higher paying job and start making a high income. It's important not to let your living expenses rise at the same rate as your income.

While there are many unexpected expenses that will pop up – controlling your normal expenses is vital. Even if your minimum payments might seem low on your expenses, think about the total costs.

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Establish an Emergency Fund

Having an emergency savings is a great staple for any family. While you might think your job security is high, it's possible to lose your job for almost any reason.

Having an emergency fund as a backup source of cash can help to mitigate any financial pressures you might be facing when losing an income.

Saving early is one of the best steps you can take to enhance your financial future.

Be sure to keep your emergency savings separate from your other accounts and only use it when it is truly an emergency.

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Invest for the Future

Investing is essential for wealth creation and financial success. If you are able to take advantage of an employer sponsored retirement plan or another investment account, this can be a great way to pave a stronger financial future.

There are many investing tips you can follow such as having a diversified portfolio and using dollar cost averaging to purchase shares – but it's all about getting started.

Investing works by giving your money time to grow. While a 7% return might not be attractive immediately, over time it will compound and grow exponentially.

Eventually your brokerage account might amount to more than a child's college tuition.

Increase Your Income

Increasing your income can be a financial hack to build wealth and become independently wealthy.

Whether you get a new job, ask for a raise, or start a side hustle – increasing your income and making more money can be a great way to strengthen your financial future.

There are many side hustles you can start to grow your income. For example, making stickers to sell, flipping on eBay, or pet sitting with Rover are all great options.

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Even if your side hustle only makes a couple of hundred dollars each month – this income can be invested into compound interest accounts to make even more in the future.

How Much Money Can Your Assets Make?

The amount of money you can make with the best assets to buy in your 20s will vary depending on the type of asset and the amount of assets you buy.

For example, making retirement plan contributions and using other tax advantaged accounts can have stronger returns than other assets because you'll receive a tax credit or tax deferral.

Other assets, like investing in the stock market or investing in real estate can make you much more money although you might not benefit from tax deferred investment accounts.

It's very possible to make over 6 figures annually from your investments and income producing assets depending on the amount of money you have to grow.

For index funds and other investments made into the stock market, a normal return will be around 7% to 10% annually – hence the reason many personal finance experts rave about them being a reliable way to grow wealth.

By making equal dollar purchases routinely you can help to mitigate risk and maximize your returns. This will help you to achieve a lower average purchase price no matter what the market is doing.

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Disclosure: This link is an affiliate link, meaning, at no additional cost to you, I will earn a commission if you click through and make a purchase.

Final Thoughts on Assets to Buy in Your 20s

There are many options to consider when you're looking to purchase an asset in your 20s. Between index funds, real estate assets, and other asset classes – the options seem to be endless.

The key is to get started purchasing appreciating assets that grow in value and build wealth.

What do you think the best assets to buy in your 20s are? Comment below!

Forrest
Forrest is a personal finance, entrepreneurship, and investing enthusiast dedicated to helping others obtain life long wealth. He owns several different blogs and is also passionate about health and fitness.

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