Very few young people in their twenties are ready for long-term commitments in the financial market. Assuming you did escape the credit card pitfalls and owe nothing to any high-interest credit card companies; you should still consider your immediate needs.
Where will you be living? What will your expenses be as a new comer to the adult world? Will you need to relocate? How secure is your current job? Sure, taking that couple of thousand you received at graduation and putting it in an interest growing account is a great idea; but think short-term.
Individual Savings Accounts or ISA’s do have low interest earning potential, but the money is available if the need should arise. Young people should realize that many banks and financial institutions have competitive rates in regards to savings accounts and it never hurts to shop around. A simple phone call or two will tell you exactly what financial institution holds the best and highest interest rates for your extra cash. For those that choose to invest their extra cash in cash ISA, the money is out of harms way from the volatile economy. For others, the thought of investing in a stock option Individual Savings Account is ideal. This allows for more growth potential; however, it is a little more risky than a cash ISA.
Individual Savings Account managers can look at your age, your prospective date of retirement and invest your money in stocks and shares accordingly. Instead of actually investing your money and growing interest from the return, you will actually be buying stocks and shares in companies. This is a great long-term investment; ideal for those at an early age that can ride the markets fluctuating ups and downs. Depending upon the risk you may want to invest internationally or in those companies with established portfolios. You will want to discuss the risk involved with such stocks; as well as the return on your investment. For those that entered the stocks and shares ISA market at an early age and continued growing their portfolio; many at retirement are seeing great returns.
Perhaps the smartest investment in your future begins at your chosen career. Young people should look for companies that offer pension plans or money purchase pensions; this in many ways is just as important as your current rate of pay. Companies are slowly distancing themselves from offering pension plans; it is a costly expense. Although you may be young and thoughts of retiring are too far in the future to imagine, the truth is you are your own destiny. Invest wisely and seek employment that does offer money purchase schemes and contribution pensions. These are in fact a great part of your salary package and should be taken advantage of to the fullest.
The average retiree in the UK is paid only £400 per month from the National Insurance paid in throughout their work-life. This is in no means a pension scheme; this amount is barely surviving. The only way to ensure that you have financial security for your old age is to start young and plan.
