Best Ways to Invest Money Young

Contributor, Benzinga

Want to jump straight to the best? Most of our users prefer Interactive Brokers for stock trading.

Ask two people why they invest and you’ll likely get two different answers, yet everyone’s reasons stem from one idea; to end with more than you started. This usually occurs over some period of time. Below are common reasons people invest.

Reasons to Invest

  • Retirement: Adds to your ability to quit work and live off the gains later in life.
  • Life events: Puts enough money together to pay for a wedding or starting a family.
  • Personal development: Save for college and higher education.
  • Housing: Bank enough money for a down payment.
  • Wealth creation: Make money to increase your net worth.
  • Provide for others: Invest to generate funds for charity.
  • Avoid inflation: Use low-yield savings accounts to offset inflation.

Create a Plan

People often give Treasury bonds as gifts for newborns for college. Such a conservative investment guarantees the money and gain will be there when needed, but this strategy may not be right for someone trying to make enough to quit his job.

Your reason for investing creates the framework for an investment plan and considers the following:

Goals

  • Goals should be as specific as possible.
  • They answer how much and by when.

Risk profile

  • An individual’s personality and goals define how much risk to accept.
  • With a longer time horizon, you can take more risk now that will average out over time.
  • Create a portfolio geared towards lower volatility if the thought of waking up one morning with your portfolio down 5% makes you uneasy,

Income vs expenses

  • Financial plans look at inflows (income) and outflows (expenses).
  • Expenses include ongoing items like food, housing and loan payments
  • What remains after paying all your expenses can be used for investing.

Types of Investments

After you’ve created an investment plan, select your options. Investments fall on a scale that balances risk and return. Riskier stocks should provide bigger gains than safer ones. Stocks should provide better returns than bonds. The type of investments you choose balances these forces.

Stocks

  • Partial ownership of a company.
  • You share in the profits and losses along the way.
  • Different stocks have different levels of risk.
  • When companies go bankrupt, stockholders usually get nothing.
  • Stocks can be easily bought and sold.

Best Stock Brokers

get started securely through Webull’s website
Best For
Intermediate Traders and Investors
N/A
1 Minute Review

Webull, founded in 2017, is a mobile app-based brokerage that features commission-free stock and exchange-traded fund (ETF) trading. It’s regulated by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).

Webull offers active traders technical indicators, economic calendars, ratings from research agencies, margin trading and short-selling. Webull’s trading platform is designed for intermediate and experienced traders, although beginning traders can also benefit.

Webull is widely considered one of the best Robinhood alternatives.

Best For
  • Active traders
  • Intermediate traders
  • Advanced traders
Pros
  • No account maintenance fees or software platform fees
  • No charges to open and maintain an account
  • Intuitive trading platform with technical and fundamental analysis tools
Cons
  • Does not support trading in mutual funds, bonds or OTC stocks
get started securely through SoFi’s website
Best For
IPO Investing
N/A
1 Minute Review

SoFi’s mission is simple: to help reach clients like you reach their financial independence and realize their ambitions. SoFi knows that this independence comes from making decisions that help your money start to work for you in the long run. The brand helps individuals make these decisions through personal financial products such as personal loans, student loans and automated and active investing

The brand additionally provides in-person experiences such as educational and networking events, personalized guidance from experienced financial planners and one-on-one advising with professional career coaches. SoFi’s services have been highlighted in outlets such as Forbes, Medium, and CNBC’s Make It.

Best For
  • IPO Investing
  • Mobile Investing
Pros
  • U.S.-based customer service
  • Highly-rated mobile app for iPhone and Android
Cons
  • Only available in the U.S.
get started securely through Moomoo’s website
Best For
Active Traders
N/A
1 Minute Review

Moomoo is a commission-free mobile trading app available on Apple, Google and Windows devices. A subsidiary of Futu Holdings Ltd., it’s backed by venture capital affiliates of Matrix, Sequoia, and Tencent (NASDAQ: FUTU). Securities offered by Futu Inc., regulated by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).

Moomoo is another great alternative for Robinhood. This is an outstanding trading platform if you want to dive deep into smart trading. It offers impressive trading tools and opportunities for both new and advanced traders, including advanced charting, pre and post-market trading, international trading, research and analysis tools, and most popular of all, free Level 2 quotes.

Get started right away by downloading Moomoo to your phone, tablet or another mobile device.

Best For
  • Cost-conscious traders
  • Active and Advanced traders
Pros
  • Over 8,000 different stocks that can be sold short
  • Access trading and quotes in pre-market (4 a.m. to 9:30 a.m. ET) and post-market hours (4 p.m. to 8 p.m. ET)
  • No minimum deposit to open an account.
Cons
  • No chat support
get started securely through Interactive Broker’s website
Best For
GlobalAnalyst Product
N/A
1 Minute Review

This latest groundbreaking technology is IBKR GlobalAnalyst, a new trading tool that helps investors compare the rate of PEG or price-earnings growth valuations and provide more immediate and comprehensive financial metrics of stocks, globally.

Recognizing that stock selection can be challenging for investors to compare the valuations of domestic and international stocks, Interactive Brokers created GlobalAnalyst to offer investors a simple, yet powerful tool to easily evaluate investment opportunities around the world.

Using GlobalAnalyst, investors can search for stocks by region, country, industry, market capitalization and currency to uncover undervalued stocks worldwide. The resulting table displays the current market and financial metrics, including the PEG Ratio. The PEG Ratio is the PE ratio divided by the three-year compound earnings growth rate, and smaller PEG Ratios typically indicate undervalued companies.

Best For
  • Price earnings growth valuations
Pros
  • Easily evaluate investment opportunities
Cons
get started securely through eToro’s website
Disclosure: eToro USA LLC; Investments are subject to market risk, including the possible loss of principal.
Best For
Copy Trading
N/A
1 Minute Review

eToro is a broker that offers access to over 25 of the world’s most popular cryptocurrencies, forex and over 1600 stocks. They have a few unique education and useability tools. Traders can begin buying and selling in as little as 10 minutes.

eToro’s unique CopyTrader feature allows new investors to “copy” the buy and sell orders of professional investors, while the company’s eToro Club feature provides investors with a range of additional education tools and resources. 

Best For
  • Traders looking for an easy-to-use platform
  • Traders who want to practice their trades using a virtual account before entering the market
Pros
  • Simple platform that is easy to master
  • CopyTrader feature that allows new traders to copy the same strategies used by professionals
  • Virtual dummy account that gives you $100,000 to practice trades
Cons
  • High non-trading fees
get started securely through eTrade’s website
Best For
Desktop Trading
N/A
1 Minute Review

E*TRADE is an online discount trading house that offers brokerage and banking services to individuals and businesses. One of the first brokers to embrace online trading, E*TRADE not only survived both the dot-com bubble and Recession — it thrived. You can choose from two different platforms (one basic, one advanced). E*TRADE is a suitable broker for traders of most skill levels, whether you want to buy mutual funds and hold them for decades or dabble in options swing trading. E*TRADE offers a library of research and education materials to help you out.

Best For
  • Active traders
  • Derivatives traders
  • Retirement savers
Pros
  • Sophisticated trading platforms
  • Wide range of tradable assets
  • Exceptional customer service
Cons
  • Limited currency trading
  • Higher margin rates than competitors
  • No paper trading on its standard platform

Government and corporate bonds

  • Guarantee of payment from a company or government.
  • Failure to pay a bond results in default.
  • Bondholders can force the issuer to sell assets to pay them back for their investment.

Real estate

  • Ownership of residential or commercial land or buildings, including primary residences.
  • Very illiquid market that can take weeks to months to buy or sell.
  • Risk varies depending on the location and market cycle.
Get started securely through Diversyfund’s website
Best For
Low Cost Real Estate Investing
N/A
1 Minute Review

-NOTICE- Benzinga has been alerted that Diversyfund has suspended its monthly dividend. This review will be updated once we investigate these changes to the platform’s dividend payments.

DiversyFund isn’t your average crowdfunding platform. You’ll find that the company puts a twist on the traditional everyday crowdfunding platform, beyond anything you can find online with a simple Google search. You only have to look under DiversyFund’s skin one layer to surmise that DiversyFund is a conscientious developer and sponsor and helps hedge risk through improved vetting.

DiversyFund offers a multifamily real estate investment trust, the DiversyFund Growth REIT, and its main goals are to increase cash flow and resale value. It’ll automatically give you access to multi-million dollar real estate assets.

Best For
  • Those looking for an alternative investment beyond stocks and bonds
  • Individuals who aren’t sure they want to be landlords in the traditional sense
  • Investors who aren’t accredited
Pros
  • Only need to pony up $500 to get started
  • Open to investors all over the world
  • No expensive broker fees
Cons
  • You’ll only be able to access “blind pool” investments, which means that you can’t opt out of specific properties
  • There’s only one real investment option, the DiversyFund Growth REIT
Get started securely through CrowdStreet’s website
Best For
Accredited Investors
N/A
1 Minute Review

Crowdstreet is an online real estate investment platform that lets investors choose from a wide range of real estate investment offerings to crowdfund. Crowdstreet investors are free to buy into managed funds, individual buildings or even build a bespoke investment portfolio that includes both kinds of deals.

CrowdStreet’s platform has a diverse range of property types, ranging from multifamily to office, industrial, self-storage and others.

 

Best For
  • Accredited investors
  • Long-term investors
  • Investors looking to diversify from stocks
Pros
  • User-friendly interface
  • Diverse investment offerings
  • Great investor resources
  • Proven performance history
  • Many offerings eligible for inclusion in self-directed IRA
Cons
  • Accredited investors only
  • Most offerings require a $25,000 minimum investment
get started securely through Groundfloor’s website
Best For
Non-accredited Investors
N/A
1 Minute Review

Groundfloor is open to non-accredited investors and private individuals looking for active real estate alternative investment. Groundfloor has great volume with more than 10 investments. 

Individuals with small portfolios will also like the low $10 minimum and 0 investor fees. However, most of the loans are given to house flippers, and there is a risk of borrowers defaulting on their loans. 

Best For
  • Non-accredited investors: It is a good option for non-accredited investors who want to invest in an individual capacity.
  • Private investors with small portfolios: Groundfloor charges a relatively small premium of $10, which private investors with small portfolios find attractive.
  • Active-investors: Groundfloor is also ideal for investors who want to actively maintain and control their real estate portfolio.
Pros
  • Charges the lowest minimums in the industry
  • 0 investor fees
  • Open to non-accredited investors
Cons
  • Offers no bankruptcy protection
  • High rate of an uncured default
  • Many loans are for judicial-only states
Get Started securely through Mainvest’s website
Best For
Investing in small businesses
N/A
1 Minute Review

Mainvest allows people to invest in local small business with a minimum investment of only $100.

Best For
Pros
Cons
Get started securely through Streitwise’s website
Best For
Small Account Real Estate Investing
N/A
1 Minute Review

Streitwise is a unique online real estate investing platform that was designed to give investors, both big and small, an equal opportunity to invest in real estate. At its core, Streitwise is a real estate investment trust, but it’s one of the few online real estate investing platforms that is available to non-accredited investors.

Best For
  • Investors looking to diversify
  • Investors with less than $200k in annual income
  • Passive traders
Pros
  • Consistent quarterly dividends
  • Low, transparent fees
  • Low investment minimum
  • Convenient and easy to use
Cons
  • Limited offerings

Peer to-peer lending

  • Lending to individuals or businesses
  • May not come with the same rights to force asset sales as bondholders
  • Used by individuals to start businesses or lower high-interest payments
  • Risk and return is evaluated on an individual deal basis.

Savings accounts and certificates of deposit (CDs)

  • Money given to banks or financial institutions provides a small but guaranteed interest rate.
  • Conservative investment that people use for emergency funds
  • Easy-to-access and very liquid
  • CDs may have a penalty for closing them early.
  • Both may require a minimum balance.

Education and self-development

  • Use savings to pay for school and training.
  • You take classes and develop skills with the expectation that it will lead to better jobs in the future.

Choose a Preferred Platform

There are several digital financial platforms you can try, stock brokers to review, banks and many more. If you’re just getting started, you can try a platform like MoneyLion when you need to build your credit, invest, manage your money and learn more about your finances.

Learn more about stocks. Check out Benzinga’s article How to Buy Stocks for Beginners.

Final Thoughts on Investing Young

Reducing your expenses is one of the best ways to invest. People often forget to look at the way they live as an opportunity to make money. Spending $300 to add insulation into your home could provide a better return than the stock market. Paying off your credit card that charges 20% interest will get you a better return than most stocks.