Investment Options for Millennials | Your Money Haven

“Wealth building is a marathon not a sprint” – Dave Ramsey At the forefront of earning or having money is knowing how to use it (well, the best way to use it).

It is one thing to have money and quite another to make it grow. One of my favorite money phrases is ‘making your money work for you’. That’s really what your money is there for, not to torment you or lead you astray (I hope that’s not you).

One way to make your money work is to invest. In an earlier post, More Money? Here are Investment Tips, I wrote on tips you should consider when you’re looking to invest, including taking note of your risk appetite, determining the amount of money you are looking to invest and doing your research. Read it here if you missed it.

Once you have these down, it’s only fair that we also consider some of the investment options out there. I might have tagged this post to millennials (22 – 36year olds) but it will also be useful for others so do read it even if you don’t consider yourself a millennial (the song, Forever Young comes to mind).

This is probably a good time to apologize if some of the words used or concepts mentioned in this post are too technical. I will be happy to answer any questions you may have.

Just before we look at the possible investment vehicles, let me briefly explain the notion of compound interest, which I had mentioned in this post Investing Tips.

The Joys of Compound Interest

I remember learning about compound interest in my high school Economics class over a decade ago, it seemed like an interesting concept but I never really understood its practical application to my finances until a few years ago.

Interestingly, it’s been said that one of the world’s best known geniuses, Albert Einstien, referred to compound interest as “the greatest mathematical discovery of all time”. If so, then its good to know that our dear Albert bought into this economic phenomenon.

In simple terms, compound interest is ‘interest on interest’. It is the interest that accrues intermittently on the initial principal and any other accumulated interest on that principal over a period of time. This means you need to reinvest the interest that you receive for any given period for it to be ‘compounded’.

Let’s put this in context, Nathan invests #100,000 in a specialized savings vehicle where 10% interest accrues annually (compounded) for a period of 5 years. At the end of five years, Nathan would have generated the sum of #161, 051 as opposed to #150,000 if he did not compound his interest (10% of #100,000 is #10,000 per year and over 5 years, it will #50,000).

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About King Alex

A simple individual that wants to make an impact

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