How to Invest in Your 20s [Best Ways to Start Investing Money]

Your 20s are a defining decade. It’s the time in your life when you’re starting to figure out what kind of person you want to be, what career you want to pursue, and how much money you should be saving.

In this article, you’ll learn how to invest in your 20s, which is different from how you might invest in other decades of your life.

If you’ve never invested before, investing is very different than simply saving up your extra cash in a savings account. When you invest, you’re putting money in an investment vehicle with the hope that your money invested will grow and compound over time.

There are many types of investments, and some are riskier than others. And the best investments for a 20-year-old are ones that are high risk and high reward because when you’re young, you have more time to make up for any potential losses.

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Investing in Your 20s—Top Tools of the Trade

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I’ll provide a lot of advice in the ensuing paragraphs, but I’ll also mention a few platforms that either enable you to buy and sell assets or help you research potential investments. Here are my top picks: 

 

Investing in Your 20s Should Involve Risk

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Your 20s should involve risk, but not recklessness. Young investors should be willing to take on some risk. That doesn’t mean you should dive in headfirst and invest everything in high-risk stocks, but it does mean that you shouldn’t shy away from investing in riskier options.

When investing in your 20s, go in with the understanding that sometimes things don’t go as planned. Sometimes the market will take a downturn; that comes with the territory when trying to grow wealth over time.

But that shouldn’t stop you from pursuing investing as a way to establish a positive financial future. After all, the younger you are, the more time your money has to grow. Additionally, the younger you are, the more time you have to withstand market fluctuations over time.

How to Balance Investing with Student Loan Debt

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Student loan debt is a significant concern for many people in their 20s. The average American holds nearly $40,000 in student-loan debt.

The good news is that if you have student loan debt, it doesn’t mean you can’t invest. The key is to find a balance between paying off your debt and investing in your future.

The mistake some people make in their 20s is avoiding investing altogether. Some financial experts encourage young people to get out of debt entirely before even considering investing. However, avoiding investing when you’re young is a mistake because you miss out on the wonders of compound interest. Do not avoid investing just because you have student loan debt.

Instead, develop a plan that allows you to meet your debt obligations while also planning for your financial goals. Here are a few tips for balancing student loan debt with investing:

• Create a budget and stick to it. Figure out how much money you can afford to invest each month. Before landing on this number, make sure you first take care of your other expenses (like rent, food, and transportation).
• Start small. If you’re starting, don’t invest too much money at once. Try allocating $50 or $100 per month until you get the hang of things.
• Think about your long-term goals. What do you want to achieve in the next five or ten years? Investing can help you get there, but make sure you’re putting your money towards things that will benefit you in the long run, too (like retirement savings).
• Find a good mentor or source of information. If you’re feeling overwhelmed, it might be helpful to talk to someone who can help you create a plan that works for your unique situation. You don’t necessarily need a financial advisor in your 20s. Still, you can talk to a financial coach, read an investment newsletter, or find an expert you like on social media who gives investment advice relevant to your stage in life.

Make sure you sign up for The Weekend Tea, our free weekly newsletter that over 10k monthly readers use to level up their money know-how.

Establish a Budget that Includes Savings and Contributing to a Retirement Account

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As mentioned, when you’re in your 20s, it’s essential to create a budget that includes your monthly spending, monthly investing allocation, and your plans to save for the future.

You may be wondering how much money you should save or invest each month and where you should put that money.

Here are some tips for investing in your 20s:

• Look for an employer that offers a 401(k) plan with matching funds. The employer match on a 401(k) plan essentially acts as free money. It’s also the most straightforward way to start investing in your 20s because it comes from your paycheck.
• Make it automatic. People are successful with employer-sponsored retirement plan options like 401(k) accounts because they don’t have to think about investing. You may have the option to invest in low-cost index funds or target-date funds that provide suitable investment risks and returns for your age. You can do the same thing with other investing accounts, too, by having a portion of your paycheck automatically moved to an account you use for investing.
• Try contributing at least 15%-25% of your income to investment accounts each month. If you can’t contribute that much, start with a smaller percentage like 5% and gradually increase your contribution as your income grows.

Here are some tips for saving in your 20s:

• If you don’t have enough money to start investing, try cutting back on your discretionary spending. You can do this by canceling unnecessary subscriptions, spending less on alcohol, or dropping cable.
• Find ways to increase your income. If you’re working a part-time job on the weekends, try asking for more hours during the week or applying to another position that offers higher pay and better benefits.
• Create an emergency fund account first. Before you invest, start an emergency fund where you can stash money in case of unexpected expenses like car repairs or medical bills. An emergency fund is essential because it prevents young people from taking out high-interest credit card debt (which could lead to even more significant problems down the line).

Once you’ve established an investment and savings plan, you’ll be well on your way to getting your finances in order.

Related: 8 Best Budgeting Apps for Couples to Grow Together

Do you want to get serious about saving and planning for retirement? Sign up for Retire With Riley, our free retirement planning newsletter.

Where Should I Invest Money in My 20s?

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Risky assets with high risk-adjusted returns are best for your 20s. You are young and have the most energy, potential, and time to recoup any losses you may incur in risky investments. It is also a great time to experiment with riskier assets because of how long you can ride out market swings before making adjustments to your investment portfolio.

Below are a few examples of high-risk, high-return investments that you may want to consider in your 20s:

Stocks

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If you’re looking for high-risk, high-return investments, stocks may be the way to go. Stocks can also be quite volatile, meaning they can quickly go up or down in value. However, as a young person, you have the potential to ride out stock market volatility because of how much time you have before retirement.

That being said, it’s essential to diversify your stocks across different companies and industries. That way, if one investment goes sour, your other investments can balance each other out (don’t put all of your eggs in one basket). As a result, you’ll likely be more comfortable taking on some risk if you decide to invest in stocks.

Invest in stocks with Robinhood

Robinhood is a standout investment app for cost-minded investors thanks to their continued $0 commissions on stocks, ETFs, options, and cryptocurrency; 24/7 trading; and the use of fractional shares, which allow people to invest with as little as $1.

Robinhood has long catered to beginner investors with its gamified interface and growing library of educational content. But Robinhood has grown up, too—from a bare-bones app to a full-featured platform, chock full of tools and capabilities designed to both build up notice investors, and help beginners get the most out of their accounts from the get-go.

For instance, Robinhood now offers traditional individual retirement accounts (IRAs) and Roth IRAs via Robinhood Retirement. We love that investors have the option of self-selecting all their investments, having Robinhood recommend a portfolio (made up of five to eight ETFs), or mixing the two by starting with Robinhood’s recs and tweaking to your own preferences. IRA investors can choose from stocks, ETFs, and options, but not crypto. If you open up an IRA with Robinhood Retirement, Robinhood will match 1% of any IRA transfers, 401(k) rollovers, and annual contributions to your account—typically almost immediately after you make your contribution. (Robinhood Gold subscribers get a 3% match on new contributions, though rollovers and transfers are still 1%.) 

Sign up for a Robinhood brokerage account or Robinhood Retirement account today.

Related: 15 Best Long-Term Stocks to Buy and Hold Forever

Investment Funds

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Investment funds such as mutual funds, exchange-traded funds (ETFs), and closed-end funds (CEFs) help diversify your risk across dozens, hundreds, even thousands of securities, such as stocks, bonds, real estate investment trusts (REITs), and more.

Invest in Funds With Plynk

Plynk®, for instance, is an investing app designed to not only help you start putting your money to work, but teach you about the markets and your money along the way—and now it will help you grow your dividend income.

The Plynk app charges no account opening fees and lets you start investing with as little as $1. It offers commission-free trades on 5,000 stocks and nearly 2,000 ETFs, and also provides access to more than 50 mutual funds and four cryptocurrencies. You can use the app as a traditional brokerage account, but if you’d prefer the potential tax advantages of retirement accounts, the Plynk app also allows you to open traditional IRAs and Roth IRAs.

One of the app’s newest features is a dividend match. Plynk will provide a cash match of 25% on dividends generated within the account, allowing you to earn up to $250 extra annually.

Begin today: Sign up with Plynk using our exclusive link to kick-start your investing journey.

Related: Plynk Review: Great for All Investors, Easy on Beginners

Real Estate

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Another investment option that can offer high returns is investing in real estate. While it’s not as volatile as stocks, real estate is still a risky investment because you can’t always predict real estate market trends.

If you can find a suitable property and flip it for a profit, you could see some healthy returns. Another option is to buy a property and rent it out. Renting out properties can be a solid investment, as you’ll typically see positive cash flow from month to month. However, you’ll need to be prepared for the occasional vacancy or maintenance issue.

But if you’re not interested in the backbreaking work of flipping properties or becoming a landlord, you have two options:

• Purchase a publicly traded REIT in a brokerage or retirement account.
• Invest via a real estate crowdfunding platforms.

Both of these are pooled investments that allow you to invest in one or more properties without having to do all the physical legwork, and for a fraction of the cost that it would take to buy a property yourself.

Invest in real estate with Fundrise

The premier real estate crowdfunding platform is Fundrise. This real estate investment platform allows you to get started for as little as $10. You can invest in residential and commercial real estate, as well as private credit and venture capital.

The Stock Market is Your Friend

Investing in Individual Stocks

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As mentioned, when you buy an individual stock, you’re buying part of a public company. While this is riskier than investing in a mutual fund or index fund, individual stocks have the potential to make you positive returns.

To invest in individual stocks, you’ll need to open a brokerage account. Brokerage accounts allow you to buy and sell stocks, as well as other investments like bonds and mutual funds. When choosing a brokerage account, it’s essential to consider fees. Some brokerages charge a commission for every trade, while other stock trading platforms are completely free.

It would also help to look at the minimum investment required by each brokerage. Some require $500 or more to open an account, while others like Webull will let you start with just no minimums. And right now, if you make a qualifying deposit, the company offers free fractional stocks to get you started.

Related: Webull Review: A Commission-Free App for Every Trader

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Investing in Index Funds

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An index fund is a mutual fund or exchange-traded fund that tracks an index, such as the S&P 500 or the Dow Jones Industrial Average. They’re designed to provide investors with a diversified portfolio, which reduces risk.

The fees associated with index funds are usually lower than those charged by other mutual funds. Many brokerages offer index funds, and you can buy them directly through the company or a mutual fund provider like Vanguard or Fidelity.

Do you want to get serious about saving and planning for retirement? Sign up for Retire With Riley, our free retirement planning newsletter.

Investing in Exchange-Traded Funds (ETFs)

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Exchange-traded funds are similar to a mutual fund, except they can trade during regular market hours on the stock market. The ability to trade during the market’s regular hours means you can buy and sell ETFs just like individual stocks.

ETFs offer investors a way to diversify their portfolios without needing to buy multiple stocks. They’re generally low-cost, and many brokerages offer commission-free trades for ETFs.

Investing in Mutual Funds in a Retirement Account

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If you’re investing for retirement, you may want to consider investing in mutual funds.

Mutual funds are a way to invest your money and have it managed by professionals.

Having this expertise can be a good option for people who don’t have the time or knowledge to manage their investments. You can also buy passive index mutual funds like VTSAX or VFIAX, which track market indexes like the CRSP 5000 or S&P 500, respectively.

Most brokerages offer tax-advantaged retirement accounts that allow you to invest in mutual funds. Be sure to look at the fees charged by the brokerage, as well as the minimum investment required.

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How Can I Invest Aggressively in My 20s?

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There are many different ways to invest your money, and it can be tricky to decide what’s the best option for you. If you’re looking to make more money in your 20s aggressively, there are a few things you should consider.

One option is investing in individual growth stocks selected by an award-winning stock picking service like Motley Fool Stock Advisor. Its analysts have a proven track record of finding stocks that outperform the market, and they can help you make informed decisions about where to invest your money.

Related: 14 Best Investing Research & Stock Analysis Websites [2026]

Another option is investing using diversified portfolios through a robo-advisor like Acorns.

Robo-advisors use computer algorithms to create diversified portfolios for you, which makes them a great way for beginners to start investing. Young investors just getting on their feet will want to look for a service with low nor no account minimums or costs.

Acorns is a simple, automated platform that uses pre-built portfolios of ETFs to keep investors exposed to stocks and bonds, similar to many robo-investing offerings. Its basic approach makes it one of the best investment apps for beginners.

Related: The 10 Best ETFs for Beginners [2026]

At What Age Should You Start Investing?

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There is no set age when you should start investing, but the sooner you start, the better off you’ll generally be. The more time your money has to grow, the more opportunity it will have to compound and build upon itself.

There are a few things to keep in mind when you’re ready to start investing:

• Start small by investing a little money and gradually increase your investment amount as you become more comfortable with the process.
• Choose investments that align with your goals, risk tolerance, and time horizon.
• Eventually, diversify your portfolio across different asset classes to reduce overall risk, including non-stock investments.
• Keep up with current market trends and make changes to your portfolio as needed.

Make sure you sign up for The Weekend Tea, our free weekly newsletter that over 10k monthly readers use to level up their money know-how.

Should I Use a Financial Advisor?

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At your stage in life, in your 20s, you probably don’t need a financial advisor. Just invest aggressively with low-cost brokerages, whether you have a robo-advisor select your investments or use stock research tools to do it yourself.

These days, many robo-advisor companies employ financial advisors who can answer any questions you might have.

Eventually, when your investment sums grow large enough and your needs become more complex, you should seek out a financial advisor. But in your 20s, a financial advisor will rarely be worth your time nor your money. Not to mention, you’ll learn a lot by starting to invest by yourself.

How Much Money Should You Invest in Your 20s?

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When you’re in your 20s, it’s a great time to start investing. You have plenty of time to make up for any losses, and you can afford to take some risks.

However, here are some tips for how much money to invest in your 20s if you’re concerned about poor returns.

• Start small: $500-$1,000 is plenty to get started with and allows for room for error.
• Diversify: Don’t put all of your eggs in one basket; your investments should have an asset allocation across different types of stocks, bonds, real estate, etc.
• Patience: With any investment, you have to be patient.
• Investing is risky: Don’t invest money you can’t afford to lose.
• Expect the unexpected: While the stock market typically offers positive returns over long periods, it can have fluctuations day to day and even year to year. Outside forces (like pandemics and recessions) can impact returns in the short term. Still, when you’re young, you can often wait out any stock market dips and enjoy overall returns in the long term.

Related: 12 Easy Ways to Lower Your Gas Costs

What Is the Best Investment for 20-Year-Olds?

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When it comes to investing, there’s no one-size-fits-all answer. You’ll need to figure out what works best for you based on your risk tolerance, financial situation, and personal goals. However, if I had to make any choices, I’d say there are two investments that best fit the aggressive growth profile of most  20-year-olds:

• Real estate: Investing in real estate is an excellent option for young investors because it offers some market stability and income potential.
• Stocks: With stocks, you’re buying a piece of a company that will have ups and downs but has potential for significant profits if held over the long term.

Of course, the absolute best investment you can make as a 20-year-old is an investment in yourself.

If you’re an entrepreneur, start investing time and effort into your business while you’re young and before you have significant responsibilities (like starting a family.) If you have a side-hustle or passion project, put some of your time, income, and passion towards that. You never know where it will lead or when a part-time gig can before a full-time job.

Starting your own business gives you the potential to make a lot of money. It could enable you to control your destiny completely. There are no guarantees in life, but above all, definitely consider investing in yourself, whether it’s through your education, your own business, or your mental health.

No matter what option you choose, remember that any investing takes knowledge, time, and patience, so be prepared to ride out any bumps along the way. The most important thing is to start early (right now!) and stay consistent.

Do you want to get serious about saving and planning for retirement? Sign up for Retire With Riley, our free retirement planning newsletter.

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Disclosures

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All Plynk disclosures can be viewed here.