Spend, Save and Invest Smartly

How to Create an Investment Portfolio in Your Early 20s


Set goals. If your objective is retirement, calculate how much you will need vs. how much income you will have when you retire.


Choose a strategy that will allow you to meet your goals. Brokers and others offer varying advice on the best way to allocate assets, therefore talk to financial advisors, read financial newspapers and magazines, and visit financial Web sites.


Pay yourself first. Set aside 10 percent of your annual income and invest it.


Invest in an Individual Retirement Account if you are eligible.


Put your money in conservative investments at first; for instance, mutual funds that buy a variety of blue-chip stocks. After you have a solid foundation, you can choose higher-risk investments.


Diversify. Buy a variety of investments; for instance, if you are investing in mutual funds, you might put 30 percent of your money in growth funds, 30 percent in aggressive growth funds, 20 percent in tax-exempt bond funds and 10 percent in money-market, checking and savings accounts.


Buy what you know. If you go beyond mutual funds and decide to buy individual stocks, invest in companies that you know something about.

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