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How should you invest in your 20s?

The 20s is a great time to set the foundation for the rest of your life. Maybe you’re finishing university, maybe you meet your life partner or maybe you get your first job.

What’s becoming painfully clear for most people is that it’s unlikely to be the decade that you’re able to buy your first home without help.

But, that doesn’t mean you need to YOLO with your money and spend all of it eating avo on toast, right?

If you’re 25 you have at least 40 years until the official age of retirement. That is a huge amount of time to compound your money. Even 10 years can create fantastic wealth.

So, what should you invest into in your 20s?

Some people might say cryptocurrencies. At best, that seems like a lottery with a ticking clock. At worst, a lot of the current major currencies could head towards $0 over time.

Some people might say buy an investment property. To get your foot in a door you need a huge deposit. Property prices are currently going down and negative gearing just means throwing cash down the drain in the hope of capital gains. I don’t think now is the right time to invest in property.

You have already guessed what I think the answer is, seeing as you’re reading a website about shares.

Shares have proven to be the best way to make money over the last 50 years and I think it will be the same again over the next 50. Businesses just love making more profit. They are trying to make more profit every year.

Investment professionals have to make good investment returns every year. You don’t have to think like that. As I said at the start of this article, your investment horizon is much longer. You can invest for the long-term.

If you don’t have much interest in shares you should go for a passive investment which should grow well for a long time, perhaps forever.

Exchange-traded funds like BETANASDAQ ETF UNITS (ASX: NDQ) which gives exposure to Apple, Alphabet (Google) and Facebook should continue to grow strongly. Or the Vanguard MSCI Index International Shares ETF (ASX: VGS) could be a good option, it gives exposure to over 1,500 businesses around the globe.

ASX-listed investment entities like WAM Capital Limited (ASX: WAM) or Magellan Global Trust (ASX: MGG) have investment teams with a history of outperforming the market.

Perhaps you want to profit from the baby boomers who keep banging on about avocado on toast? Long-term investment ideas like Japara Healthcare Ltd (ASX: JHC), Ramsay Health Care Limited (ASX: RHC) and Gateway Lifestyle Group (ASX: GTY) could be good options.

Foolish takeaway

Whatever shares you invest in, I think it’s important to just start and learn. It’s the best chance of becoming wealthy.

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Motley Fool contributor Tristan Harrison owns shares of JAPARA DEF SET, MAGLOBTRST UNITS, Ramsay Health Care Limited, and WAM Capital Limited. The Motley Fool Australia owns shares of and has recommended BETANASDAQ ETF UNITS. The Motley Fool Australia has recommended Ramsay Health Care Limited and Vanguard MSCI Index International Shares ETF. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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