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What's the best way for a 20 year old to invest $5,000?

I would like to invest $5,000. If invested, I would plan not to touch that money until age 35. I want to put the money away and sort of "forget" about it while I go through the next 15 years of my life. I would like to have all profits reinvested during that time. I am considering the S&P 500. Is this my best option?

Financial Planning, Investing, Starting Out
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April 2017

This is a great question! The best place to put your money depends on a lot of different factors. If you have any debts that have interest rates in excess of 10%, you should highly consider paying them off. This is the easiest way for you to earn a guaranteed rate of return. If you are debt free, you may want to start investing in a retirement account. If you are employed and your employer is offering you a match, then you should contribute at least enough to get your full match. If they do not offer a match, then you may want to fund an IRA. However, if you are planning on needing the money at age 35, then a retirement account would not be a great option due to penalties and taxes. A brokerage account is always an option if you are needing access. As you can see, we really need more information about your situation to know what is best. Generally, I would say a diversified portfolio of stock-based ETFs would be a great start to put your money to work. I hope this helps! If you still have questions about your situation, talk to a fee-only financial planner.

April 2017
May 2017