Outline for young savers and investors
The following outline is provided as an overview of and topical guide for young savers and investors.
Young savers and investors (or beginning savers and investors) generally are beginning their financial journey are focused on the basics of establishing themselves and planning their future. This article is intended to help a reader learn about a subject quickly, by showing what topics it includes, and how those topics are related to each other.
The financial life cyle
Young savers and investors are at the first stage of the financial life cycle, within the early accumulation phase.
Banking, budgeting and emergency fund
- Open a low-cost bank account to avoid high banking costs
- Create a budget to stay on top of your spending
- Establish an emergency fund to prepare for unforeseen events
Credit and managing debt
- Learn to manage debt and make smart credit choices
- Learn about credit reports and credit ratings to maintain a good credit record and protect yourself from fraud
- Pay off student loans
- Apply for and manage one or more credit cards
- Start a job and deal with benefit choices including pension plan contributions or Group retirement plans
- Investigate employee benefits
- Decide if you want to own or rent a dwelling
- Possibly manage a mortgage
Insurance
- Learn about the types and general principles of insurance
- If becoming a home owner, look a home insurance, mortgage insurance and possibly title insurance
- If renting a house or an apartment, you need tenant insurance
Starting to invest
- Learn about compound interest and the Importance of saving early
- If also paying back loans, consider Paying down loans versus investing
- Create a financial plan and get started on investing
- Decide if you want to start with a Tax-Free Savings Account (TFSA) or a Registered Retirement Savings Plan (RRSP) (see also TFSAs versus RRSPs)
- Learn about Portfolio design and construction
- Look at simple index portfolios or asset allocation ETFs for the simplest do-it-yourself (DIY) options
What's next?
At some point, spouses and children may enter the equation and bring other financial considerations into the mix, including life insurance and perhaps Registered Education Savings Plans (RESPs).
See also
- Asking portfolio questions
- Outline for mid-life investors
- Outline for pre-retirement investors
- Outline for investors in early retirement
- Outline for investors in late retirement
References
Further reading
- Bernstein, William (2014). "If You Can: How Millennials Can Get Rich Slowly" (eBook)., a short, inexpensive e-booklet aimed at getting twenty-somethings with their first 401(k) started on the path to retirement saving and investing. Can easily be applied to Canadian millennials.
- Financial Wisdom Forum topic: "Financial Plan for a Young Investor (and a thank you)"
External links
- GetSmarterAboutMoney.ca, Your first job | Getting started
- Investor Academy, Understanding the 5 Financial Stages of Life (warning: some US content)
- RetireHappy.ca, Financial Stages of Life
- Bogleheads.org, "Starting Out" Life Stage Chapter Master Thread