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Financial Guide For Millennials: How To Invest Your Spare Money

Millennials have seen the economy go through some tough times in recent years and this has led to a distrusting mindset towards investments. What’s more, there seems to be this idea that only the rich can use their money for investing, but the reality is that anyone can. It is a good idea for millennials to invest their spare money now as it will only become more profitable over time. If you are thinking about investing then you have come to the right place.

Here are 5 tips for investing your spare money.

1. Research Robo-Advisors

If you are new to the investing world then it is best to seek out the advice of professionals. However, if you can’t get to the real-life professionals then the next best thing is to get advice from Robo-advisors. Companies have created Robo-advisors to help simplify the investment process, and you can learn more here if this sounds of interest to you. There are several companies you can use including Acorns, Betterment and Wealthfront. Different companies serve different purposes, for instance, if you are looking to experiment with a bit of your spare change then you should opt for Acorns. Whereas, if you are looking for long-term profitability then you are better off using companies such as Wealthfront or Betterment.

2. Put A Cap On Your Spending Limits

As investing contains an element of risk, it can stir up similar feelings to gambling, which in worst-case scenarios can lead to addiction. For this reason, it is important that you put a cap on your spending limits. Take the time to research what you want to invest into and then work out how much you can feasibly invest without putting yourself under any financial pressure. When you are just starting out in the investing realm it is better to start small and work your way up as you learn tricks and tips along the way.

3. Understand What Investment Options There Are

Another thing you need to do before taking the plunge into the investment world is to take the time to understand what investment options there are. If you are using a Robo-advisor then they will decide what investments are best for your account, however, it will benefit you to have a basic understanding of investment options. There are a lot out there, but here are four that are worth knowing:

– Stocks: People tend to be quite familiar with how stocks work as it is simple. You buy a small part of a company and everyone has their share (stock) that they own. The value of your stock demands on demand, the higher the demand the higher the value.
Exchange-Traded Funds (ETFs): In recent years ETFs have become increasingly popular and it is a great way for beginners to get involved. This is because ETFs are diverse and have relatively low transaction fees.
– Mutual Funds: These are professionally managed investments and mutual funds can provide individuals with a diverse portfolio. Typically mutual funds have higher fees than ETFs because they are being actively managed.
– Bonds: Bonds are probably the least risky kind of investment as you loan money to a borrower and they repay you the original sum with interest on top. With less risk comes less reward but at least you know it is a safe and secure route to take with your money.

Having an understanding of each of these will only benefit you, especially if you wish to broaden your investments in the future.

4. Decide On A Level Of Risk

Before you start investing it is a good idea to research the different types of risks associated with each method. That way you can decide with a clear and well-informed mind on how you want to proceed. Establishing a level of risk at the start will help prevent you from making poor decisions in the future as you will have already made the big decisions. As mentioned earlier, risk can lead to feelings associated with gambling addictions and so you have to be mindful of that. If you are someone with an addictive personality then it may be best to start with low-risk investments.

5. Keep an Eye On Your Investments

You should make a habit of regularly checking in on your investments. It can be easy to put money away and forget about it but if you actively manage your account and take the time to research relevant markets/investments this will help you increase the profitability of your investments.

Investing your spare money now could lead to long-term wealth and so it is well worth doing. Everyone starts somewhere so don’t worry if you are new to it all, there are plenty of resources and advisors online who can help get you started.


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