My advice would be to think about investing like having a healthy diet. Eating your vegetables is like investing in the S&P500. It’s totally fine to take on more risk, but first make sure you have the basics covered. A balanced diet includes low-risk safety funds, solid-return large market ETFs, and tax-sheltered growth.
Max out your 401k and put everything into an S&P500 fund. Look for the one with the lowest fees and that matches the S&P500 performance as closely as possible.
Next, build up a safety net of 6 months’ worth of expenses. If you’re still living with your parents, don’t worry about this step for now.
After that, here’s a plan for your personal investment fund: If you start with $15,000 in an S&P500 fund and add $200 a month, by the time you’re 65, you could have a million dollars, assuming an 8% return. This is separate from your 401k and your emergency fund.
Now that you’ve taken care of the basics, you can have some fun. You mentioned you wanted to invest in dividend ETFs, but honestly, the best way to build wealth is to focus on total returns and reduce your taxable income.
A dividend is a sign a company has cash flow, but it’s also a sign they’re just paying old board members instead of reinvesting in the business. If you really want to invest in dividend growth, look for companies that are growing their dividends, not just paying them out.
If you want to pick individual stocks, only do it if you’re okay with some risk. Stocks can have big swings, so you need to do your research and stick to companies you’re familiar with.
Good luck! Let’s get that money to work!