Investing in stock market

How To Start Investing In Your Twenties

As you graduate from your studies and start working full-time, you may be wondering what to do with your savings and how to start investing your money. Starting young can really make the difference when looking for financial returns. 

Here are a few ideas on how to grow your money:

  1. Take a risk

Many individuals are tempted to put their money in a savings account and wait for it to grow with whatever interest rate your bank is giving you. This is a decent option for countries with higher interest rates but in Dubai, most savings options provide you with less than 2% for an interest rate.

In these instances, it is ideal to take some of your savings and invest in the stock market. This is a good option if you are looking for long-term returns on your money.

The stock market can be quite volatile but monitoring your stocks over 10+ will generally result in you coming out ahead. This option is also a great way of diversifying your portfolio to protect it from the effects of inflation – as the buying power of your savings decreases over time. 

  1. Raise your savings rate 

Putting away money every month is the first step in starting to grow your money. In the beginning, if you’re saving less than AED 300, that’s okay. Over time you should be slowly increasing the amount that you put away. Set monthly savings goals for every year and this will help you keep track of your money and stay on an upward trend. 

  1. Start an individual retirement account (IRA)

Opening an IRA is a tax-advantaged account that is used to save for retirement. This tool is usually used by private-sector workers or by those individuals that do not have a retirement plan provided for them by their workplace. Contributing funds to an IRA can be done through a wide range of assets. This could be bonds, stocks or a certificate of deposit.

A bond is usually not as risky as stocks and is issued by companies or government agencies. It will lead to a payout, according to a specified interest rate, at an agreed date – when the bond has reached maturity. A certificate of deposit (CD) is a type of savings account that has a fixed rate and can only be accessed on a certain date. CD’s may also require minimum deposits from you.

IRA’s also allow you to switch up your investments without being taxed – not an issue in Dubai but may be useful to know if you have money in another country. 

  1. Seek professional advice 

There are financial institutions that exist to guide you through the investment market with personalized financial planning. These institutions are backed by years of experience and know how to cater to individual client needs. This means you have guidance in selecting the most appropriate investment choices for you and have help in monitoring your portfolio.

It can be daunting to start thinking of what the best step is to take when you start making money. It doesn’t have to be difficult because you can start with just putting your money away and if you are uncertain of investing, there are now AI technologies that will help you. 

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