Early adulthood is the best time to start financial planning. You might think retirement is a lifetime away, but the choices you make in your 20s can have a significant impact on the rest of your financial future. The sooner you start saving, the more money you get to enjoy later on.
There's so much more to financial investment than finding alternative ways to make money and playing the stock market. Start by exploring your options, and be sure to weigh the pros and cons of each before you commit. One of the major benefits of taking on investments in early adulthood is the chance to learn more and make even better choices later. Read on to learn how to reap the rewards of three investments many young adults overlook.
High-Yield Savings Accounts
Savings accounts allow you to put funds away for emergencies, financial goals, or personal security. A regular savings account earns interest, but a high-yield savings account earns significantly more. These are best for buying a house, veterinary expenses, paying for your car, starting a business, etc. For retirement accounts, you're better off choosing an individual retirement account (IRA) or 401k with tax benefits.
A high-yield savings account can be more beneficial than a regular savings account so long as you're able to contribute monthly. You should check if your bank has a minimum balance or contribution requirement as
well as any fees. To meet the return, you'll likely have to complete a minimum deposit amount when you open your account. No matter how much you earn, budgeting is an essential financial success skill. As your income grows, you'll be able to put more money away with a good savings plan.
529 Savings Account
You can open 529 savings account for yourself to pay for higher education in the future. This may be toward a bachelor's, but you could also use it to pay for your graduate degree or additional skills classes at a college for career growth. In addition, a 529 savings plan is tax-free until you withdraw funds, so you can safely save without worrying about added expenses. One thing to note is that a 529 account does have contribution standards, so you should only consider it if you can meet the minimum requirements.
A Whole Life Insurance Policy
Did you know that you can sell a life insurance policy for cash? Many young adults write off life insurance if they're single, but this could cause them to miss out on a big opportunity later. Life insurance can be an excellent way to save for retirement or other significant costs, all while giving your loved one's protection in the event of your passing. To get cash for your life insurance, you'll have to buy permanent coverage. Whole life insurance lasts as long as you live, and a portion of your monthly premiums go toward a cash value that builds interest. You can learn how to sell
your life insurance policy in a guide that explains the entire settlement process.