How to Invest in Your 20's

If you get started early with investing, you can become extremely wealthy. In fact, if you put $5000 in the stock market at age 20, 21 and 22 and then leave it in until you turn 65 you will have more money than if you put $5000 in the stock market every single year from age 30 to 65. (So, if you start early, 3 years of investing is as good as 35 years of investing later.)

	Commit to investing. You can have all the theory you want, but if you don't apply it, you will get no results.
	Write down your short term and long term financial goals. Don't invest for short term goals (5 years or less). Short term goals require savings rather than investments. Long term goals should include things like retirement, the college education of current or possible children, and buying a house with cash.
	Get on a written monthly budget. Write down what money is coming in a where it should go. If you do this, the money will go there.
	Get out of consumer debt (credit cards, cars, student loans, etc). Having no debt means that your income will be available for investment instead of paying off debts and their interest.
	Put 15% of your income towards retirement savings. Retirement is a long way off, but if you invest wisely now, you will have a large nest egg at retirement. If you max-out one Roth IRA from age 20 to age 65 (at a 12% rate of return in the stock market), you will have over $7.6 million at retirement. If you have a spouse and max out his/her Roth IRA, you can double that amount!
	Have a large appetite for risk. You've got 30-45 years ahead of you. If your mutual funds drop by half one year, don't be scared. Over the long run the stock market goes up.
	Always invest in down times as well as up times. Just think of a down market as your favorite mutual funds going on sale. If you bought a something at a store for $10 and it went on sale next week for $5, you wouldn't return your $10 item to get $5 back, instead you'd go out to the store and buy the item again at $5. It should be the same with investments.