How to Create an Investment Portfolio in Your Early 20s

Series Summary

Personal finance is the application of financial principles to the monetary decisions of an individual or family unit. It addresses the ways in which individuals or families obtain, budget, save and spend monetary resources over time, while taking various financial risks and future life events into account. Components of personal finance might include checking and savings accounts, credit cards and consumer loans, investments in the stock market, retirement plans, social security benefits, insurance policies and income tax management. In this free video series on investing, a portfolio manager discusses a few wise investments. Find out how to open offshore accounts, and get information on the best foreign companies to invest in. Find out which investment accounts are safest and most profitable, and get information on starting up an investment portfolio at a young age. Begin putting away money for the future using this helpful financial guide.

Video Transcript

"Hello, my name is Roger Groh with Groh Asset Management. We're here this morning to talk a bit about investment portfolios when you're twenty. Well, first off, any investment that you make, whether it's in stocks or bonds or real estate or commodities or whatever it might be, really, to make money you have to think long term. The advantage of being twenty is that you can think over a thirty, forty, fifty year period before you're likely to need that money. So, what types of businesses are likely to do well over that time? Well, you have to think that there are companies that are going to grow continually each year. And, if you found a company that grew at six, eight, nine, ten percent a year over fifty years, well, you can do the math. Eventually the cash flow adds up, the value adds up, and you'll have a significantly higher stock price. In addition, if you do it right, you can receive dividend payments along the way, which means that the income component of the stock, in the end, might be even more valuable than just the appreciation in price. Now, there's going to be volatility. Remember, once every ten years you're bound to get at least one period where they're fifty percent, five zero percent, decline in prices. That's okay, though. Think long term. When you're in your twenties, you can handle more volatility in your portfolio, because, in all likelihood, you're not going to need that money until you're in your sixties, seventies or eighties. On the other hand, as you approach your fifties, sixties and seventies, you have to begin to get more conservative. Now that doesn't mean that you own different companies. You probably own the same ones, which are the best companies you can possibly find. On the other hand, you just own less, and you own more bonds in your portfolio in order to provide for stability. Now, remember, dividends are very important along the way, because you can get paid to wait, and over the longer term, they may prove to be more valuable than just the appreciation in the stock price. Hope to helped. I'm Roger Groh. Thank you for spending a few minutes with me."