This is a guest post from MD of Studenomics. A personal finance blog aimed at helping young people become financial studs.
You worked really hard to get to the point where you're now able to earn a solid income. You graduated from college, networked your way to your current job, and now you're looking for a few places to safely store your money. Let's explore a few of the options for where 20-somethings can store their money:
Online bank accounts
Its no secret that online banking is taking over for the 20-something crowd. The debate to find the best online banking account may still be on, but your goal should be to find the online savings account that's right for YOU. We all have different needs with different levels of risk. Some of us only care about an easy-to-use interface, while others are heavily focused on chasing high interest rates. An online bank account is the most conservative option for storing your money. While some of the more advanced readers of this blog will mock such an option, the less financially-savvy folks could really stand to benefit from setting up an online savings account as they enter the always interesting world of personal finance.
Any investment account, from a discount brokerage where you trade securities to safe low-return bonds, is an option worth exploring. The major issue here is that investment accounts can feel like an overwhelming topic for most college graduates without a finance background. Instead of delaying any action in this area, start off by deciding whether you will take care of your own investments or if you'll hire a financial planner to work on your behalf. Either way, if you want to consider this alternative I recommend you take action now. Stop delaying.
More from GFC, Below
An asset like a home or a car is a common place to store your money. A car is a depreciating asset, while a home is arguably considered an appreciating asset. Either way both of these assets can take up a large chunk of your savings. You need to be sure that buying a home is the right option for you before you invest a heavy portion of your hard earned savings. A brand new car on the other hand is a highly debatable purchase. The young dude inside of me says that you should get a brand new car for reliability and security purposes. The grumpy old man inside of me says to drive a used car into the ground.
Some people simply don't care about possessions. Instead of chasing passive income opportunities and planning for retirement, some young folks have chosen to spend their money on life experiences. These experiences vary anywhere from climbing Mount Everest to going away for a few weeks, all the way up to long term traveling (over a year). I personally envy these people because I travel a few times a year and spend the rest of my time working my but off to finish school build my business. It's also easy to judge these types of folks, but frankly Tim Ferriss summarizes experiences perfectly with this quote:
People want to experience what they think only millions can buy.
These are the 4 most common options that come to mind when 20-somethings try to decide where they will store their money. Please feel free to list any options that I may have missed.
This is a guest post from MD of Studenomics. A personal finance blog aimed at helping young people become financial studs. MD is not endorsed or affiliated with LPL Financial.
photo credit: Jeff Keen