“I’ve got plenty of time,” you might be saying.

While that phrase may be tied to the idea that you do not need to start investing right away, we encourage you to think of it as having plenty of time to grow investments. The time you have now, as a young person, to start building a long-term portfolio is truly invaluable. The younger and sooner you begin, the more you can grow your wealth over time.

By following a few key strategies, you can start building an investment portfolio the right way:

Solidify your investment goals. Even in your teens and 20s, retirement should be a key investment goal – but you may have other goals, as well. Your investment goals will drive the types of investments you make because how long you have to reach these goals will dictate how risky your investments can be. If you have a long time to invest for a particular goal, you can take greater risk (for potentially greater upside) with your investments, such as stocks and mutual funds. For short-term goals, low-risk investments like certificates of deposit are optimal.

Diversify. No matter your investment goals, your investment portfolio should be diversified – split into diverse investment types. This typically includes domestic stocks, foreign stocks, bonds, and short-term investments. Mutual funds can help diversify for you, often incorporating over 100 various stocks or bonds within the fund. Diversification helps spread your risk out over many different investments so that, in case one particular stock experiences dramatic losses, your overall portfolio is not so greatly affected.

Keep some savings in cash. As part of your diversification strategy, keep some of your money in cash or short-term investments like certificates of deposit. This can act as an
emergency fund in case you need it.

Lead with your head, not your heart. Even as Gen Z prefers to make investments that offer a deeper emotional connection, it is wiser to keep emotions at bay when creating an investment strategy. When someone makes an investment out of emotion, such as fear or being swept up in a trend, the financial repercussions can be swift and brutal. Instead, do your research and make sure that any investment you consider is worth the risk.

If you do these things consistently, then the occasional risky or emotional investment can play a role within your overall portfolio for long-term goals, especially since you have plenty of time to reach them.

For more helpful information, visit our Youth & Young Adult page or follow us on Instagram and X!