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Pave the Way for Your Financial Future: Saving and Investing for Millennials

Office of Investor Education and Advocacy, U.S. Securities and Exchange Commission

Being prepared to tackle life’s financial hurdles – paying for higher education, saving for a home, and being ready for retirement – is critical. You may not realize it, but choices you make now can impact your financial future. Taking steps today, and setting goals, can help put you on a path to a secure financial future and retirement.

Here is a list of ten suggestions that may help you make more informed investing decisions and avoid getting scammed:

Set a budget. Write down what you spend each month, and include a category for savings and investing. If you are spending all of your income and never have money to save or invest, start by cutting back on expenses. When you watch where you spend your money, you will be surprised how small everyday expenses can add up.

Paying off high-interest debt may be your best strategy. Almost no investment strategy pays off as well as, or with less risk than, eliminating high-interest debt. Credit cards charge interest on unpaid balances, often at rates of 15% or more. If you owe money on your credit cards, the wisest thing you can do is pay off the balance as quickly as possible.

Start a savings or investment account now, even if you start small. Keep in mind that you can start a savings or investment account with a small amount and increase contributions later when your earnings increase. Getting in the habit of paying yourself first is a great way to get started. An easy way is to have money from your paycheck automatically deposited into a savings or investment account.

Financial security is best reached by starting early.  Time can be the most important factor in determining your future financial security. By starting early, you give your investments more time to work for you. The example in the chart below shows how someone who waits until age 31 to start savings, ends up with less at retirement than someone who starts at age 18, despite having saved more over a longer period:

The Benefits of Starting Early


Investing from Age 18-27

Investing from Age 31-64

Years Contributing



Total Contributed

$2000/year; $20,000 total

$2000/year; $68,000 total

Avg. Annual Rate of Return



Value at Age 65



Assess your risk tolerance. All investments involve risk, and risk and reward go hand-in-hand. If you plan to buy securities – such as stocksbonds, or mutual funds – it is important that you understand that you could lose some or all of your money. However, the reward for taking on risk is the potential for a greater return. If you have a long time horizon, you may do better by carefully investing in higher risk assets, such as stocks, than if you limit yourself to assets with less risk and less investment return. On the other hand, lower risk investments may be appropriate for short-term financial goals.

Diversification can reduce the overall risk of an investment portfolio. The saying “don’t put all of your eggs in one basket” also applies to investing. By picking a mix of investments, you may be able to limit your losses and reduce the fluctuations of your investment returns without sacrificing too much in potential gains.  Some investors achieve diversification through ownership of mutual funds or exchange-traded funds. 

Use a Tax-Advantaged Retirement Account. When you start a new job, check to see if your employer offers a retirement plan, such as a 401(k). If your employer will match your contributions, consider taking full advantage of this “free money.” For instance, if your employer contributes 50 cents for every dollar you put in, that’s an immediate 50% return. Whether or not your employer has a retirement savings plan, you can start with an Individual Retirement Account, or IRA.

Understand Fees. Fees and expenses vary from product to product and can take a big bite out of your returns. An investment with high fees must perform better than a lower cost investment to generate the same returns. Even a difference as small as .25% in fees can significantly impact your returns over time.

Check out the qualifications of an investment professional. You should always research a financial professional before deciding to work with them. You can check the details of an investment professional’s background through the SEC’s If you have questions, call the SEC’s toll-free investor assistance line at (800) 732-0330. 

Look for these Common Red Flags of Investment Fraud:

Investments that sounds too good to be true. Claims that an investment is a “CAN’T MISS” opportunity, a “BREAKOUT STOCK PICK” or similar claims are classic warning signs of fraud.

Promise of “GUARANTEED RETURNS.” Be alert to promises of high returns with little or no risk. Every investment involves risk, which is reflected in the rate of return you can expect.

Pressure to buy RIGHT NOW. Don’t be pressured into buying an investment before you have a chance to think about and research the opportunity.

Be on the lookout for fraudulent unregistered offerings. Any offer or sale of securities must be either registered with the SEC or exempt from registration. Otherwise, it is illegal. Registered companies are required to file regular reports with the SEC. While some companies may be exempt from registration, you assume more risk when you invest in a company about which little or no information is publicly available. You should always check whether an offering is registered by using the SEC’s EDGAR database or contacting the SEC’s toll-free investor assistance line at (800) 732-0330.

Taking action now could help you put you on a path to a secure financial future. Use our tools and resources on at

The SEC’s Office of Investor Education and Advocacy is providing this information as a service to investors. This is not a statement of official SEC policy or a legal interpretation. If you have questions about the meaning or application of a particular law or rule, please consult with a lawyer who specializes in securities law.


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