15 Investing Moves to Make in Your 20s

If you're new to investing or are just starting to think about investing for the very first time, you likely have plenty of questions about the best way to get started. Building a stronger financial future isn't something that happens overnight. Setting yourself up for success by constructing a solid foundation now is one of the most important steps you can take to achieve a more fulfilling and financially free adulthood.

Don't wait. These are 15 crucial investing moves to make in your 20s, starting now.

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Whether you have $50 or $500 to invest in the stock market, you don't need to wait to have thousands of dollars on hand to start building your portfolio. While a larger starting investment might help you build up your portfolio faster, you can diversify your holdings from the beginning by utilizing options like fractional investing or even index funds.

ALSO READ: How to Invest Money

Your investing strategy will mature and develop over time, and your risk tolerance may change as well. While no investment is entirely risk free, understanding the level of risk you're comfortable with can help you to determine the best businesses to put your money toward and start building your portfolio with. Determining and aligning your personal financial goals can also help you more accurately form a picture of your risk tolerance and investment style.

In volatile market times, it can be especially tempting to jump on the bandwagon of the latest investing fad or buy a stock based solely on its presumed appreciation potential. But to borrow from the great Warren Buffett, "Buy into a company because you want to own it, not because you want the stock to go up."

ALSO READ: What Is the Stock Market and How Does It Work?

While money moves like dealing with outstanding debt may not seem related to building a robust investment portfolio, carrying excess debt could prevent you from realizing your full potential as an investor. For example, if you regularly carry high-interest debt, you may find that you are unable to regularly invest or are forced to dip into your portfolio to pay your bills.

You don't necessarily have to be debt free to invest -- and not all debt is created equal -- but ensuring that other aspects of your financial health are on track is key to keeping up with your overall investment portfolio goals.

It's an age-old temptation, trying to determine the opening in the market to jump in. While it would be convenient (and newsworthy) to be able to predict shifts in the market with such accuracy, the odds aren't in your favor (or any investor's, for that matter).

On the other hand, when you continue to regularly add to your portfolio -- in the high as well as low tides of the market -- you have the advantage of time on your side, rather than trying to capture an elusive window with only very a slim chance of succeeding in doing so. Ironically, by trying to time the market, you could actually miss out on the best days in the stock market and forfeit truly meaningful returns.

5 Stocks Under $49
Presented by Motley Fool Stock Advisor
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!" It's true, but we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Click here to learn how you can grab a copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

You don't have to be a financial expert to build a rock-solid investment portfolio. That said, no matter your level of investing experience, taking the time to get to know the companies you buy inside and out is one of the most important steps you can take as a long-term investor.

ALSO READ: How to Research Stocks

Whether you gravitate toward more volatile high-growth stocks, value buys, or a combination, your investing style now might look very different than it will 10 or 20 years from now. Even so, as you develop your investing targets, including short- and longer-term goals for your portfolio, determining the types of businesses and sectors you want to focus on will enable you to enact a more clear-cut and efficient stock-buying strategy.

Fear can be just as much your enemy when it comes to buying stocks as when it comes to selling them. Fear can also cause you to overthink a potential investment so much that you even miss out on a great opportunity to buy.

And while investment decisions should be tied to long-term factors like the underlying business (rather than fluctuating factors like stock price), no investor bats a thousand every time. If the investment thesis for a company doesn't pan out, don't be afraid to rebalance your portfolio where needed.

Investing is a learning process. As you stay invested in the stock market over the long term, learning from your missteps and recognizing your wins, the better an investor you'll become.

ALSO READ: 3 Investing Mistakes That Are All Too Common

As we get older, our financial obligations often increase rather than decrease. One easy way to ensure that you don't get behind in your investing goals is to work investing into your budget every month. For example, a typical budget would usually include a portion for recurring bills and expenses and a portion for savings.

You can also work in a slice of your budget to regularly invest in the stock market. For example, if you know that every month, no matter what the market is doing, you're going to invest $500 in stocks, you can ensure that you're habitually adding to your portfolio while keeping up with your other core financial obligations.

Think that your emergency fund isn't related to your investing strategy? Here's the thing: Not only is it wise to have cash set aside and available in case an unexpected life event arises, but factoring this into your overall financial strategy could save you a world of pain if an emergency presents itself.

Without available cash set aside specifically for these types of situations -- money that you keep on the sidelines for a rainy day and don't invest -- you might find yourself in a position where your only option is to draw from your portfolio and sell stocks.

5 Stocks Under $49
Presented by Motley Fool Stock Advisor
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!" It's true, but we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Click here to learn how you can grab a copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

A great investing strategy doesn't have to be complicated. And factoring regular investing into your personal financial wellness plan needn't be, either.

For example, many brokerages will allow customers to set up an automated investing plan, where you can have a recurring deposit of cash put into your brokerage account each month and invested according to your pre-targeted portfolio preferences, goals, and risk preferences.

ALSO READ: Best Robo-Advisors for May 2022

Diving into a company's financial history to find out its competitive advantage, along with its risks and upside, and taking an objective look at the underlying business of a stock before you commit your hard-earned money could save you considerable frustration and headaches down the line.

As Warren Buffett has said, "Buy a stock the way you would buy a house. Understand and like it such that you'd be content to own it in the absence of any market."

Saving for a house? Planning to go back to college? Saving for a big trip with your significant other? Setting your ideal timeline for retirement?

However close or far away they may be, make a list of your near-term financial targets, as well as ones that may be 10, 20, or 30 years off.

While your financial goals may shift with time, working toward specific milestones will enable you to determine the best way to allocate your money as you achieve those targets and build out your portfolio.

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While the most effective way to invest and build a market-beating basket of stocks is to consistently and faithfully put cash into great companies, there is a caveat. As a general rule, you shouldn't be investing money that you think you might need over the next three to five years.

While no one can foretell the future, investing cash that you plan on using in the short term can be a recipe for disaster. It's exceedingly difficult to determine an ideal time to get in or out of the market, and if you happen to need that cash from your portfolio, you might have to sell an inopportune moment -- and potentially at a loss.

As you build your portfolio, one way to balance out the risk profiles of different stocks is to invest in companies that represent multiple sectors and industries. For example, if one sector is experiencing a particular bout of volatility, stocks from another more stable industry can help to align your portfolio during these periods.

While the stock market is cyclical -- and stock prices can and will fluctuate -- having a clear diversification strategy will not only provide multiple and varied avenues of growth for your portfolio but also help you produce more favorable returns over the long run.

5 Stocks Under $49
Presented by Motley Fool Stock Advisor
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!" It's true, but we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Click here to learn how you can grab a copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

Remember, there's no single right way to invest. The key is to invest in compelling and quality businesses and hold onto them for many years, throughout the ups and downs of the market. When you do that, you don't need luck or market timing on your side. In fact, when you invest for the long term, it's always a good time to buy great companies.

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