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How to invest money in your 20s

Guide for young investors

A common preconception in your 20s is to think that because most of your earning power is ahead of you, there's no reason to start investing yet.

But investing at this age – through a pension or an investment account – can reap much greater rewards than investing later in life.

Saving in your 20s

Having money saved elsewhere is a good idea if you want to start investing. Building up an emergency fund can help you cover any unexpected expenses down the line.

No matter how little you start saving each month, everybody has to start somewhere. Setting yourself saving goals – whether it's for a holiday or a new home – can help get you into the habit of saving regularly.

Think of your savings as you would any monthly utility, such as a phone bill, and if you can, pay into them before spending the cash elsewhere.

Starting a pension

It's a good idea to start paying into a pension as soon as possible. Not only will it help set you up for greater funds to draw on when you come to retire, but it can actually be a very smart way to invest your money.

Your employer may also make contributions and you'll get tax relief from the government, so you can make a great return on what you pay in.

Investing in your 20s

Investing in stocks and shares early in life could reap great rewards later on.

  • If you plan to keep the money invested for a number of years, you can afford to take a higher risk for a chance of greater return
  • You could benefit from compound returns and see your money grow faster as a result

So as long as you've got your debt and savings under control, it's something to consider.

A tax-efficient way to start investing is through a stocks & shares ISA. If you're comfortable with a higher-risk investment fund, we have a Stocks and Shares ISA that provides a ready made fund. We also offer an Investment Account. But remember – the money you put in could go down in value as well as up.

Financial decisions in your 20s can put you on the right track for the whole of your life, so making an effort to understand all of your options could pay off in future. If you need more personalised advice, consider speaking to a financial adviser.

Looking to invest?

Visit our Investments page to see the different types of investment accounts we offer.

Contact us

Still need some help? Give us a call.

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