How to Start Investing in Your 20s (From Someone Who Waited Too Long)

I didn\’t start investing until I was 29. That\’s one of my biggest financial regrets. Not because 29 is old – plenty of time still – but because every year I waited cost me real money.

If you\’re in your 20s reading this, you have something I didn\’t: time. And in investing, time is everything. Let me explain why and what I wish I\’d done.

The math that haunts me

Let\’s say you invest $200/month starting at 22, earning average market returns of about 7% (adjusted for inflation). By 65, you\’d have around $470,000.

If you start the same $200/month at 32 instead? About $220,000.

That\’s $250,000 difference for the exact same monthly contribution. The only difference is 10 years of time.

This is compound interest and it\’s not just math – it\’s genuinely magical. Your money makes money, and then that money makes more money. The longer it runs, the more dramatic the effect.

Why I waited (bad reasons)

\”I\’ll invest when I make more money.\” I kept saying this. Then I\’d make more money and my expenses would rise to match. There was never a \”good time.\”

\”I don\’t understand investing.\” I was intimidated by terms I didn\’t know. Turned out the basics are simpler than I thought. You don\’t need to be an expert.

\”I should pay off debt first.\” This one\’s more complicated. High-interest debt (credit cards)? Yes, pay that first. But I used debt as an excuse even when I could\’ve done both.

\”The market might crash.\” The market crashes all the time. It also recovers all the time. Over 20+ year horizons, it basically always goes up. Waiting for the \”right time\” is a losing strategy.

What I wish I\’d done at 22

Step 1: Open a Roth IRA. Takes 15 minutes online. Fidelity, Vanguard, Schwab – they\’re all fine. Pick one and stop overthinking. I explain the Roth vs Traditional decision in more detail if you\’re not sure which to pick.

Step 2: Set up automatic transfers. Even $50/month. Make it happen on payday before you can spend it. If $50 feels like a lot, start with $25. Just start.

Step 3: Buy a target date fund. These are designed for people who want to invest for retirement and not think about it. You pick the fund closest to your retirement year (2060, 2065, whatever) and it handles the rest. One fund, done.

Step 4: Don\’t touch it. Seriously. Don\’t check it obsessively. Don\’t panic when the market drops. Just let it sit and grow for decades.

Step 5: Increase your contribution rate over time. Every raise, bump it up a percentage point.

If your job has a 401k

Does your employer offer a 401k with any kind of match? Do that first. If they match 50% up to 6%, you\’re getting a 50% instant return on that money. Nothing beats that.

Contribute at least enough to get the full match. Then if you have more to invest, add to a Roth IRA.

For 2025, you can contribute up to $7,000 to an IRA if you\’re under 50. The 401k limit is higher at $23,500.

Don\’t let perfect be the enemy of good

I got paralyzed for years thinking I needed to \”understand investing\” before I could start. Read all the books, watch all the videos, figure out the optimal strategy…

Turns out: buy target date fund, contribute regularly, don\’t touch it. That\’s like 90% of what you need to know. You can optimize later. The important thing is getting money into the market.

Check out Vanguard\’s IRA comparison if you\’re deciding between Roth and Traditional. For most young people in lower tax brackets, Roth makes sense.

If you feel behind

At 25 feeling behind because you haven\’t started? You\’re fine. You have 40 years. Start today.

At 29 feeling behind because you wasted your early 20s? That\’s me. Still worked out ok. Start today.

The best time to plant a tree was 20 years ago. The second best time is now. Same with investing.

Don\’t let another year go by. Future you will be so grateful you started.