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The short version

  • It’s important to utilize tax-advantaged accounts to the maximum reasonably possible.
  • Don’t be so afraid of potential losses when you have decades before retirement.
  • Expand your investments beyond the stock market.

Five investments tips I would give my 22-year-old self

One of my favorite parts of the “Back to the Future” series is when villain Biff Tannen steals the time machine and goes back in time with a sports almanac. He hands over the book and tells his teenage self to use it for sports betting, giving him an edge that turns him into a wealthy tycoon.

I hope I will never be a supervillain, but I’ve dreamt of going back to tell myself stock market secrets that would give me enough money for a yacht with a helipad. Until I get my hands on a time machine, the best I can do is share with others the hard-won advice I wish I could give my younger self.

Just getting started? Check out some of our guides:

1. Max your Roth IRA investments every year

The Roth IRA is one of the best investment accounts available, particularly to investors in their 20s and 30s with decades before retirement. The amount you can contribute to this type of account is limited by IRS regulations and tends to increase periodically. Because of the favorable after-tax treatment, a Roth IRA's investments grow tax-free when held for qualified withdrawals in retirement.

For 2023, the IRS allows you to invest up to $6,500 per year (or $7,500 if you’re 50 or older), though limits may apply depending on your income. I’ve hit the max for years but got a later start than I would have liked.

More: How to invest in Roth IRA

2. Go over the employer match in your 401(k)

In an early job, my employer would match 100% of my 401(k) contribution up to 3% of my pay. Later, I worked somewhere that offered a 50% match for contributions up to 6% of my salary. Others offered better and worse variations, and I always followed personal finance advice to take full advantage of my employer match.

The problem is that I treated the match like a limit. I didn’t go beyond my employer match until years into my career. 401(k) accounts may require some fees and limit your investment options, but the automated features and tax benefits make it worth going above the employer match in many cases.

More: How do employee stock options work?

3. Take a little more investment risk

Warren Buffett is my investment hero. I’ve always taken his quotes and advice about investing to heart. That includes his investment rules: “Rule Number One: Never Lose Money. Rule Number Two: Never Forget Rule Number One.”

It’s kind of like the rules of Fight Club, but for your finances.

Over the years, I primarily focused my single-stock investments in blue chip companies with a long history. But this meant I missed out on some exciting growth stocks that I noticed before big stock value increases because I was afraid of losses. Those include Netflix and an early investment in LinkedIn that I sold for a profit but should have held longer.

Lesson learned: It’s okay to hold risky stocks and IPOs, particularly if you have a long time before retirement.

More: How to determine your risk tolerance

4. Buy more crypto earlier and HODL

I was lucky to learn about cryptocurrency very early. Bitcoin came about in 2009, and I got my first slice in 2015. I made my first purchase at $228.91 per BTC. As of this writing, a single BTC is worth about $20,000, down from a high of around $70,000. I made a profit on that early Bitcoin purchase but would have loved to have bought more and held on to sell at the top.

Even if I hadn’t sold, Bitcoin is worth 87x more today than when I bought it the first time. That would be a pretty incredible return in seven years. Again, I didn’t put too much into crypto early on because I was risk-averse and didn’t understand the potential of the coming digital currency revolution.

Today, the world of cryptocurrency is more questionable. I believe the industry will survive and a few top currencies will turn into successful decentralized businesses. But for now, it’s still wise to avoid investing more than you can afford to lose in crypto.

5. Learn real estate investing ASAP

I’ve been lucky to be in a position to meet many millionaires and even a few billionaires and ask them questions about their businesses and finances. A common thread I noticed among those with self-made wealth is real estate. Only a few can get high-power jobs with seven-figure salaries. But almost anyone with good credit and a down payment can become a landlord and make money from real estate.

In the stock market, returns come from appreciation (stock price increase) and dividends. Real estate offers similar benefits through appreciation and monthly cash flow from rent payments. I “house hacked” my first condo, which I bought about 10 years ago.

House hacking means living in a home while renting out part of it to someone else. In my case, I had a two-bedroom home and split costs with a roommate. I made a ton of money on that condo and now wish I had done a better job learning about the ins and outs of real estate investing right out of college rather than a few years later.

More: Pros and cons of real estate investing

The takeaway: Do your best and stay focused on the future

There’s no perfect investment strategy. Some investments will go up, and you will likely pick a few losers. Take both as lessons on what you can do better in the future.

There’s no reason to hang on with regret for past failures, but there’s always a reason to work better to understand your investment portfolio and options for the future. With that focus, you’ll be putting yourself in the best position for long-term investment success.

Real-world advice from our experts:

About the Author

Eric Rosenberg

Eric Rosenberg

Freelance Contributor

Eric Rosenberg is a finance, travel and technology writer in Ventura, California. He is a former bank manager and corporate finance and accounting professional who left his day job in 2016 to take his online side hustle full time.

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