Investing Early in Your Career

Clients in their 20s begin building and managing their own investment portfolios. Argos Investment Advisors works closely with individuals to build portfolios that meet their goals. There are several key things to consider when building your portfolio. These include (1) take the free money, (2) know your risk tolerance and time horizon, and (3) use an index approach to investing.

Sign up for the 401(k) at your work as early as possible. Even if you put a small percentage of each paycheck in the 401(k) account, you will see it grow to a significant size overtime. While withdrawals are restricted until the age of 59 1/2, the funds are not taxed until you make withdrawals. The impact of no taxes over decades greatly enhances ending wealth. Also many employers provide matching funds that are effectively free money to employees.

For extra funds we can also help you start an investment account that you can put money into over time. In designing the portfolio we will meet with you to determine your risk tolerance, time horizon, goals for the portfolio and gather other pertinent information.

We are big believers in using equity index funds rather than paying higher fees to find managers that promise to pick the winners and avoid the losers. History indicates this is an extremely hard thing to do and next to impossible to do when taxes are factored into the equation. Additionally, there is an abundance of academic research supporting the indexing approach.

Putting money away for the future either in a 401(k) or in a regular investment account can have huge benefits later in life. As an example someone saving $200 a month and beginning at age 25 would have $936K when they are 65, assuming a 9% annual return. If he or she delayed until age 40 when they had more money but saved $400 a month, they would only have $448K. The benefits of starting early and letting the money compound over decades are significant. As Albert Einstein said, “The most powerful force in the universe is compound interest.”

Argos Investment Advisors works with clients to build portfolios for the long haul. We can help with portfolio construction, liquidity management, and other investing needs.