Should You Be Investing in Your 20s
The Amplified Impact Podcast
August 18th, 2023
I had a chat recently with a friend….a young guy in his early twenties with a successful YouTube channel.
He paused it to gain real-world experience, but now he’s wondering about money moves.
For those of you in your twenties, here’s a thought: Instead of just stashing money in a retirement account, consider reinvesting in yourself.
Take courses, workshops, coaching…invest in skills and networks. Your income could grow way faster by investing in personal development early on.
Now, for the high-potential earners, focus on doubling down on your skills and opportunities, even if it’s in equity positions or business ventures. Time is your ally.
And for those further along in their careers, explore various investment avenues – stocks, real estate, bonds. The key is to make your money work for you.
Bottom line? Context is king.
Choose the strategy that matches your current situation and goals.
And remember, it’s not financial advice – just a different take.
TWEETABLE QUOTE:
“Get that money working harder for you than you work for it.”- Anthony Vicino
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Episode Transcript:
Anthony Vicino:
I had a call the other day with a friend, young guy, he’s in his early twenty s, I think he’s 23, maybe 24 years old, had a very successful YouTube channel that he had grown. I can’t remember exactly how many, but it was like 900,000. I might be making that number up, but it was big. It was a big YouTube channel. And then he kind of walked away from it because the purpose of the YouTube channel was all around personal development business. And one of the things that he started to struggle with was the fact that he was so young and he was talking about things that he didn’t have a lot of worldly experience on. And so he wanted to stop that. I think he just wanted to take a step away from that and go out into the world and build and actually do things and learn from people further along.
Anthony Vicino:
And so he took this really cool position, working with some badass entrepreneurs and just soaking up experience and wisdom and learning. And he’s growing at a phenomenal rate. All that’s to say is that he’s at this position in his life where he’s making really good money. He has opportunities in front of him that could be incredible money making opportunities in the future. But it’s out there, right? Like when you take equity positions in businesses, it takes a long time for that to come to fruition. And so one of the questions that he’s wondering is what should I do with my money? What should I be doing? Should I be invest? Testing it? And even if you’re not a young buck who’s making a ton of money, maybe you’re a little bit further on in the game, you’re a business owner or maybe you’re at a position where you’re like, I don’t know what to do with my money. I wanted to give a little bit of framework or some thought process that I go through when I’m thinking about should you invest or what should you invest in? Rather and this is not investing advice, it’s just a framework, a way of thinking about this. Now, for my buddy who is this young guy who has a ton of earning potential, the advice is going to be very different than if you were in your late 30s, early forty s.
Anthony Vicino:
You have kids, you have a w two for him, where he’s at in his journey. And for a lot of people, even if you don’t have a lot of earning potential yet, in your 20s, maybe you’re just coming out of school and you’re taking your first entry level position making 40, $50,000 a year, 30,000, I don’t know. Like I was making 30 when I came out. At that point you hear a lot of people saying you should invest as early as possible in life because you want to get compounding interest on your side. But I actually think that if your goal is to live like an above average life. And you want to get to that place where you’re not just retiring at 65, but you’re actually getting there earlier, maybe in your thirty s and your forty s, then you need to play the game very differently. And in the beginning, in your twenty s I think instead of just investing $100 a month into your Roth IRA, your four hundred and one K and even if you have an employee match and I know that’s free money so I’m a little bit contrarian on this I think your money is best spent reinvesting directly back into yourself. Because at the end of the year, maybe you put $10,000 into your four hundred and one K.
Anthony Vicino:
And over the next 1015 years that will compound into be very, very meaningful amounts of money. But if you could take that $15,000 and invest it into some courses and invest it into some workshops, some masterminds, some coaching, like you invest into your skills, your network, your community, you invest into those things, you take that $15,000 investment. And now you go from making $40,000 a year to in the next year maybe you’re making $65,000, right? So now that 15,000 that you invested back into yourself is translated into higher income. And then the next year you take another 15,000. And now you’re making 80,000 and the next year you’re making 100,000. And so you’re doubling the value each year of that 15,000 effectively rather than just investing it. And I think that’s the better way to approach it. Now, if you believe that you have some really high income earning potential in the future as a young buck, or you have a business idea, then all of your time and your money should be going back into that.
Anthony Vicino:
And the reason is because you have so much time ahead of you, even if it goes to zero, even if it start over, you have so much time to recoup those things. And so yeah, I think you need to plan for the future, but I think you’re better off spent in the beginning just investing heavily into your skills so that in your late 20s, into your thirty s, you have maximized your earning potential. And in those years you can just really stack the cash in the bank account. And this flies in the face of a lot of common investing wisdom that says invest a little bit every month and put it away and then it will compound. And you hear a lot of people talk, even myself, about inflation eating away at the buying power of your money. And people are really concerned, like should I just have my money? Sitting into a checking account? It seems like it’s just kind of melting away in there like an ice cream cone in the sun. What should I do? Well, what I would do and what I do do with my own money instead of just keeping it liquid in a checking account, I keep it in treasury bills, which are fairly liquid. I keep them on like a three month or five month, four month cycle.
Anthony Vicino:
If you’re not familiar with a treasury bill, you can buy them very easily through Vanguard. You can go directly to the government and they have a website which is like janky as heck from like, the 90s but you can buy them very, very easily and effectively what it is is it’s just a bond backed by the full faith of the American government. So it’s about as safe as you can get. And right now you can get yields in the five, five and a half percent range, which is very, very strong it’s a little bit less maybe, perhaps than inflation, but that’s still great, right? In the grand scheme of things, you could even just put into a high earning savings account. I like to put it into treasury bills right now. It’s just a little bit safer given all the bank froth that we’ve seen in the last year with SVB and, you know, going under. So I prefer just to keep my liquid cash in a little bit safer investment vehicle. But usually I’m not too concerned about the banks going under.
Anthony Vicino:
So you could just put into a high yield savings account now that for a lot of people is all you need to do in the beginning. Just keep investing back into your skills. Put your liquid cash into something that’s earning a little bit of yield and don’t worry about it. Don’t worry about the opportunity cost of inflation eating away at your money. Because your goal is not to earn a 10% return. Your goal is to 100 X your earning potential every single year. So that by the time you’re 30, 35, 40, you’re making 10, 15, 20 times as much as the average 30 or 40 year old, right? Instead of getting to 40 and making 100,000 or 100 and 5200 thousand dollars a year your goal is to have the earning capacity to go out there and make a million 2 million 3 million right? And suddenly the 10% interest that you would have been earning on that $15,000 a year doesn’t really matter all that much. So that’s my contrarian take on that.
Anthony Vicino:
Now, if you’re further along in the game, you’re in your thirty s, you have kids, you have W two. You’re not necessarily geared towards making insane amounts of money in your life. You just want something a little bit more safe and secure. Then, yeah, start looking at other investment vehicles. Get that money working harder for you than you work for it. Whether that’s index funds in the stock market into real estate syndications, get into REITs like bonds. There’s so many different ways that you can invest. I think the only wrong thing at that point is to not do anything, to just sit on your money and do nothing.
Anthony Vicino:
So the advice kind of shifts as you get a little bit older and your perspective, your situation changes as you would expect. Right? Context is everything. So this message today, this podcast, was really geared towards those young folks because that’s who I was talking to, my buddy, who is in his low 20s, mid twenty s, I guess, rather, and just a different way of thinking about it, which for myself, I did not invest into my earning skills in my early twenty s and my mid twenty s. It wasn’t until my late 20s that I started getting really serious about that. And by my early 30s, mid thirty s, I was making way, way more money than the average 30 year old. And it was because I took a different contrarian approach to the world of investing. Rather than just stalking away a little bit at a time, I just poured it all right back into myself, into my personal development skills. And as a result, I now have skills that are going to compound until the day I die.
Anthony Vicino:
And they’re only going to get more and more valuable as I continue to refine and hone them with time and experience. So that’s what I would do is if I was young and just starting out or trying to figure out what to do with my money. So, hope this brings you guys little bit of value. As always. Appreciate you checking out the podcast. We’ll catch you back around these parts tomorrow. But until then, stay hyper focused, my friend.
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