While this generation has been plagued by debt and economic stress since coming of age, some Millennials are finally finding themselves with discretionary income but no idea what to do with it. When you’ve never had extra cash on hand, it can be overwhelming trying to decide whether to spend, save, or invest once you do. Here are some relatively safe first-time investment options to get you started.
1. Real Estate
Buying property tends to be a better option than renting, long-term. Rent prices are only going to keep going up and cost you more each year with no return. Home prices also go up, but when you own, that just means an increase in the value of your property. Whether you’re looking for a house to live in, rent out, or fix and flip, you stand the chance of profiting off of your purchase at some point down the line. The more you put into this kind of investment, the more you’ll get out of it, so don’t be afraid to splurge on improvements—it’ll pay off later. Plus, if you own outright, the fear of eviction will no longer loom over your head when money is tight.
2. Money Market Funds
If you want to jump into the stock market without the chance of losing everything on a big risk, money market funds tend to be relatively safe because they invest your capital diversely. Money market funds are comprised of different investments, including short-term bonds, certificates of deposit, and other low-risk options. While there is always some amount of risk involved when it comes to the stock market, this option has the benefit of generally stable.
3. Savings Bonds
Putting your money into savings may not seem as exciting as other options—mainly because there’s practically no risk involved, making this is one of the safest options. While these bonds aren’t really an investment, they do often pay some interest and have other benefits, such as protection against inflation. If you’d rather play it safe than go big, savings bonds might be the best option for you.
It may be tempting to just hide extra cash under your mattress in case of the apocalypse, but it doesn’t have to be that doom-and-gloomy. These are just three ideas to get you started with investing. With experience, you’ll gain confidence, as well as a financial safety net for future economic slumps. While reward tends to require risk, you don’t have to start big. You’ll be more successful if you start with small risks and small rewards and build up from there.