Market data powered by FactSet and Web Financial Group. Past performance is no guarantee of future results, and expected returns may not reflect actual future performance. These factors will all drive the IT sector through the next decade. The ETF has 438 holdings with 45% of the assets in the top 10 positions. Bonus: it will take more aggressive saving, but if you start in your 20s … This ETF is based on the MSCI USA Investable Market Index Information Technology, which tracks large-, mid- and small- cap IT companies. Start a great retirement benefit for less than the cost of one employee's health insurance1, Contact Support855 622 7824Monday – Friday9am to 5pm Pacific Time, © 2020 Human Interest, Inc. Disclosures655 Montgomery Street, Suite 1800San Francisco, California 94111. Stick to a well-diversified portfolio of low-cost, passive index funds. If you’re already retired and your 401(k)’s value plummets, you’re in a really tight spot (this is what happened during the Great Recession). Among large-cap growth ETFs, it is one of the top performers. Let's conquer your financial goals together...faster. Minimize fees. Millennials are way too conservative (well, financially speaking, at least). We’ll compare conservative and aggressive portfolios, discuss why your 20’s is the time to be bold (especially when it comes to your retirement accounts), and explain how to avoid common psychological pitfalls. There are two main reasons that young people should be bold investors. Aside from the return, what sets this ETF apart is its low expense ratio of just 0.08%, which is well below the average ETF expense ratio of 0.54%. Save as much as possible — Although you may not earn as much as you’d like in your 20s… How to Start Investing in Your 20s 1. Each share represents a stake in the ETF's total assets, and they generally track to a benchmark or sector. It has also had comparable performance to those two competitors (both of which, by the way, would also be good adds to the portfolio). Aggressive portfolio management may achieve its aims through one or more of many strategies including asset selection … This is the kind of portfolio you’d want if you’re more scared of losing money than not making money – for example, if you’re retired and these funds are your sole source of income. Millennials are way too conservative (well, financially speaking, at least). The technology sector has indeed driven the stocks market gains over the past decade -- and there's little chance of it slowing down over the next 10 years as society continues its digital transformation. The content in this blog post has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. While stocks may bounce around more than cash or bonds, on average, they deliver much better results – and at this stage of your life, you care about maximizing the average return. Start early and avoid individual stocks. Exchange-traded funds, or ETFs, are baskets of stocks pooled together in a single fund that is traded on major stock exchanges. With that timeframe, you can ride out the ups and downs of the market, given that you are patient of course. Even if you’re not investing for retirement , you can still have a pretty long time horizon—15 years would only … Cumulative Growth of a $10,000 Investment in Stock Advisor, Investing in Your 20s: 3 ETFs to Watch @themotleyfool #stocks $FTEC $VONG $NUMG, Investing in These 5 ETFs Could Send Your Kids to College, 3 Top Index Funds to Keep You in the Investing Game, Copyright, Trademark and Patent Information. Finally, stocks are the most aggressive investment. Aggressive investing accepts more risk in pursuit of greater return. A Fidelity analysis found that their most successful investors were those who forgot they had a Fidelity account – basically, the people who didn’t overreact to market movements. Dave has been a Fool since 2014. In the long run, a laissez-faire approach gets much better results than constant adjustments to market conditions. So how should you balance a fear of risk with a need for good returns? Aggressive Mutual Fund Category Example. Let’s say you’re 25 and plan to retire at 65. Stock Advisor launched in February of 2002. Start by looking for 401(k) plans that: If you’re looking for a great 401(k) for your employees, click here to request more information about Human Interest. Over the past 5 years, it has had a total return of 175%, which is far better than the S&P 500's 52.9% and the IT sector's 154%. For the past year, it has returned 24.7%, slightly better than its iShares competitor, which is up 23.8%. Investing involves risk and may result in loss. An investment portfolio usually consists of a variety of financial vehicles, including money market funds, Certificates of Deposit (CDs), bonds, and stocks. Investing in your 20s … Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services. Returns as of 12/19/2020. If you're employed, and your company offers a 401 (k) or other tax-advantaged retirement... 2. You aren’t investing for two or five years from now – you’re investing for your retirement in forty-plus years. There’s variation within these two groups – for example, a swing-for-the-fences aggressive portfolio may feature high-growth, small-cap stocks, while a less risky aggressive portfolio may focus more on blue-chip stocks. I lost nearly $100,000 when the Dot.com bubble burst in the 1990’s when I bought a series of … The article noted that, between the financial crisis and 9/11, twentysomethings are abnormally risk-averse. It is slightly more overweighted in technology versus the Russell 1000 Growth Index and underweight in producer durables and financials. Human Interest's investment advisory services are provided by Human Interest Advisors, LLC, an SEC-Registered Investment Adviser. Like we mentioned at the top, millennials have every right to be wary – the Great Recession’s impact still echoes through most of our bank accounts. Bottom line: ETFs are a great way to invest in growth stocks. These 3 ETFs all have aggressive growth profiles and may fluctuate depending on market conditions, but over time, which is on your side, they should deliver excellent returns. But if retirement is decades away, an individual year’s gain or loss doesn’t matter. That, in turn, means you can be more aggressive with your investments, as growth stocks have generally outperformed value stocks over time. Here are 3 of the best ETFs for investors in their 20s. Since 1990, the S&P 500 (considered a good indicator of U.S. stocks overall) varied wildly, from gaining 34% in 1995 to losing 38% in 2008. Human Interest -We are a 401(k) provider for small and medium-sized businesses. A target-date 2020 fund would be geared toward older investors, and have a much more conservative allocation. It also has a better 5-year return than the Schwab U.S. Large-Cap Growth ETF, the Vanguard Growth ETF, and the SPDR Portfolio S&P 500 Growth ETF. But while a low-risk portfolio produces better outcomes during a downturn, it’s a severe handicap in the long term. There are many good things about being in your 20s, and one of them is that you have a long time horizon until retirement. According to the Wall Street Journal article, many people in their 20’s aren’t comfortable with their finances and go with conservative portfolios as the safe, default option. It also highlights the importance of maximizing the returns on those contributions – a conservative portfolio’s slight lag in performance becomes a massive gap as years go by. So what do conservative, balanced, and aggressive returns look like? A conservative investment portfolio is weighted towards bonds and money market funds, offering low returns but also very little risk. 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