Financial Tips From a Female Investor: According to a survey conducted by Deloitte in 2023, both Generation Z and Millennials are more concerned about the high cost of living than unemployment or climate change. Half of both groups are living paycheck to paycheck, and the economic uncertainty of the past year has caused both groups to delay making significant life decisions, such as starting a family or purchasing a home.
Suze Orman, a prominent investor, and author, has a series of recommendations for younger individuals to help them achieve financial independence in the face of economic uncertainty.
Be cautious regarding necessities
A common piece of financial advice is to distinguish between necessities (such as a car) and wants (such as yet another streaming service subscription). But Orman goes further by suggesting that young adults should reduce their spending on necessities whenever feasible.
“The objective should be to spend as little as possible to satisfy their need. Undoubtedly, everyone desires a brand-new vehicle, but it is far more prudent to purchase a used vehicle that is both affordable and reliable. This will free up additional funds for other endeavours,” Orman wrote. “Same applies to a house. It is typically a financial mistake to purchase a property that is too costly. Purchase a property that you can comfortably afford.”
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Adjust Your Investment Objectives
A recent report revealed that 56% of Generation Z currently hold some form of investment, and of those, more than half are primarily invested in cryptocurrency, a high-risk venture that British government officials have compared to “gambling rather than a financial service.”
And while short-term returns can be enticing, Orman advised youthful investors to construct their portfolios with at least a decade in mind.
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Portfolio diversification is of the utmost importance.
Part of achieving financial independence is preparing for retirement, even if it seems far off. This is typically accomplished through an employer-sponsored 401(k) plan.
Traditional 401(k) plans permit pre-tax contributions. However, Roth IRAs and 401(k)s permit post-tax contributions, a benefit that young people are well-positioned to take advantage of.
Three Financial Tips From an Established Female Investor for Young Adults: Roth accounts are without question the finest option for young adults. “With a Roth, you contribute dollars that have already been taxed, and then you can withdraw the funds tax-free in retirement,” Orman explained. When you are just starting out and presumably in a low tax bracket, a Roth IRA is the best option.
