6 Unique Beginning Investments for 20-Somethings

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By Dexter Lunde

In elementary and secondary school, our teachers and parents prepared us for a lot of things: how to tie your shoes, how to write and give persuasive presentations, how to properly microwave a bowl of ramen so you don’t have to turn on the hotplate (okay, that was more of a college-level accomplishment), etc. However, one thing that most of us didn’t learn was how to stay out of debt or properly invest our money.

Once we go to college or right after we graduate, most of us find ourselves in large amounts of debt and also without the knowledge of how and where to invest what money we do have. Here are some interesting and unique starting investments if you are looking to invest some money while you’re in your 20’s.

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#1) Wine

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If you’re in college and you’re looking to start an investment that can grow into something more fruitful as you get older, why not look into wine? Between 2003 and 2011, the price of sought-after wines went up at about 250pc. It is a small-time investment that will give you a decent turnover for what you put in it. The demand for wine has increased exponentially within the last decade or so. However, there are a few guidelines that you should consider before you jump in head-first.

The minimum start-up price that you should have before you invest is about $2000 minimum (between the purchasing of wine and wine storage for a few years). Wine auction sites sell in sets of three. If you invest in some good bottles of Bordeaux or Burgundy, wait a minimum of six years for those bottles to mature. As far as good Bordeaux brands, WineSearcher.com states that

Latour, Lafite-Rothschild, Margaux, Mouton-Rothschild and Haut-Brion remain reliable as high-grade investment wines.

As for Burgundy, they suggest de la Romanee-Conti, Henri Jayer, Comte Georges de Vogue, Georges Roumier, Armand Rousseau, Leflaive, Leroy, Meo-Camuzet and Coche-Dury.

Most people who start investing in wine also take up wine as a hobby (they become “wine connoisseurs”). They know what good wine is, what it’s supposed to taste like, what the good years are, etc. So if you need to brush up on some basics, check out Wine Searcher’s Glossary of Wine Terms for more information.

If you want to look at some great information about example wine portfolios (what does well and what doesn’t) check out this example from FarrVinters Wine Investment.

#2) The Stock Market

Investing in the stock market when you’re in your twenties seems a bit too risky considering the fact that you probably don’t have that much capital to spend in the first place (why risk what you do have?). Well, a lot of you are thinking this way because only 34% of men under the age of 35 are willing to take risks when investing their money. That’s down from about 48% in 2005.

However, familiarizing yourself with how the market works is a great way to start when you are so young. If you’re antsy to actually buy, check out some large, stable companies like Coca-Cola, Disney, and Microsoft. Most of these types of market let you buy and sell without having to go through a broker. However, you should keep in mind that while brokerage fees can be large (and obnoxious), you pay them for their knowledge.

The most important thing for new investors to consider is the “buy and hold” technique. Think of it this way, if history has taught us anything, it is that the stock market has an incredible way of picking itself back up after it dives: the crash of 1987, the bear market of 1990, and from 2000-2002, are just the latest examples. So if you can have a broker help you build a strong portfolio, you can wait for a recovery you need to.

If you’re completely new to the stock market, try your hand at penny stocks (which are defined as stocks that you can buy and sell for $5 or less). It is both inexpensive and can help you assess your tendency to take risks. Are you a risk-taker or would you prefer to be more cautious? Defining your preferences when it comes to taking risks with your money will help you find out where and when you should invest your money in the stock market.

Keep in mind, however, that penny stocks come at a very high risk (because they are so cheap), especially for new investors like yourselves. Save up some money and use a chunk of that in penny stocks to help you gain experience, test out stock brokers, stock tools, and online trading sites (which normally doesn’t require a broker) but keep in mind that penny stocks are the most speculative out of all investments. So don’t put all of your eggs into this basket…or pennies into this basket.

If you want to tests out the waters before you pour your hard-earned money into the stock market, try a virtual trading simulator, like this game from MarketWatch.

#3) Non-Profit Micro-finance Organizations

These are organizations that allow you loan money to third world business enterprises. For companies like Kiva, the minimum amount you can loan out is $25. Once you start getting payments back, they give you the option of loaning that money out again, investing in something else, or keeping the money. It’s a great way to help out some needy people, invest money, and impress that hot coworker.

Powerful men like Bill Clinton, Guy Kawaski, and Nicolas Kristof (a columnist for the New York Times) all promote this wonderful organization. However, there are certain risks involved like Field Partner Risk (if the business you choose to invest in goes out of business), or Borrower Risk (if there is crop failure, theft, or reduced remittances).

#4) Index Funds

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Okay, I’m stretching this one a bit. Index funds aren’t really all that “unique” but they are safe. They are also reliable and profitable. Invest in Rob Arnott’s (he’s the head of Research Affiliates) “fundamental” indexing idea: weigh stocks by their economic rate (including book value, dividends, and sales) instead of letting your stocks fluctuate in proportion to their market capitalization.

The Vanguard Star Fund will allow you to start at $1000 (while most index funds require at least $3000). Fidelity will allow you to open an account if you can commit to depositing about $200 a month or $600 a quarter.

#5) College and Gym Memberships

Investing money in your education and in your health will save you money and help you make more money in the long run. Student loans are a necessary evil these days anyway – might as well get a degree that will allow you to pay them off in a decent time.

College can be quite the ominous task, even if you’ve already done it before. However, it is (normally) necessary to ensure that you have a comfortable and happy future. Not sure where to start? Look for your purpose (find your passions and desires).

Investing in your health early (around $10 for a gym membership) will help you learn healthy habits that will save you from bigger health bills in the future.