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How To Invest In Your 20s: What To Do And What Not To Do?

Investing in your 20s can seem too hard! So, let’s understand what you should invest in and how you should invest in your 20s to ensure you grow your wealth. You’ll also see the most common mistakes 20-year-olds make.
October 25, 2023

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Getting a monthly paycheck in your 20s can be liberating. You’ll graduate from a kid getting pocket money from their parents to a fully-grown adult who’s earning a living on their own.  

However, if you don’t put your money to work, you will regret it! There may be some sacrifices like being disciplined and accountable, but your 60-year-old self will definitely look back and thank you. 

That’s why you must begin early and buy the right assets to gain financial stability and independence. Remember, you don’t need to be Bruce Wayne to be successful, you just need to find the right assets.

That said, investing as a beginner can be hard since the information available to young investors is full of noise.  Hopefully, this blog clears it all up for you. 

Why Start Investing In Your 20s?

Beginning your investment journey at a young age has its advantages. Let’s look at these advantages in greater detail.

1. The Magic Of Compounding

Einstein called compounding the 8th wonder of the world because those who understand it, earn it, and those who don’t understand it, pay it. You’re in luck because we’re going to help you understand it.

Compounding simply means that your interest earns interest on top of itself and the principal amount. Assets like mutual funds are the prime example of the power of compound interest. 

Let’s say you invest in ₹10,000 a mutual fund with 8% returns (compound interest) and lend ₹10,000 to someone at an interest of 8% (simple interest). Here’s what will happen to both investments after 20 years:



Compound Interest

Simple Interest

5 years



10 years



20 years



Table 1.0

2. You Have More Time

You can clearly see from table 1.0 that compound interest can be your best friend especially if you give it more months, years, and decades to work its magic. 

That’s the benefit of being a 20-year-old. You have plenty of time to build a solid investment portfolio to help you with scenarios like retiring early, travelling across the world, living off the land, and more. 

For example, let’s take a race to year 60 between a 20-year-old who invested ₹100,000 in a mutual fund versus someone in their 30s. Both of them invest in the same asset at a compound interest rate of 10%:



20 Year Old

30 Year Old

21 year



25 years



30 years



40 years



50 years



60 years



Table 2.0

Being late by a mere 10 years can be the difference between financial stability and financial freedom. That’s why you need to start investing now. Discover Investment Options

3. You Can Afford To Take More Risks

You may have the liberty to take more risks (responsibly) as a 20-year-old due to fewer liabilities and more earning years. This can give you a headstart in the race for financial freedom or other goals. 

Here’s a 9 Box Model that shows how your portfolio may change as you age:

Investment Facts
Investment Facts
Investment Facts

Risk (along the X-axis): Low; Medium; High. Time (along the Y-axis): Short; Medium; Long. 

But you must consult a proven advisor like the ones on Cube to take these risks. Otherwise, you’ll make common mistakes like investing in penny stocks or falling for get-rich-quick schemes (more on that later).  

The high-risk, high-reward strategy can gradually become conservative over time as you accrue more responsibilities and liabilities. 

Things To Remember Before You Start Investing In Your 20s

1. Begin

Investing can be tough but it’s important to begin learning by doing as early as possible. Table 1.1 is a clear indicator of why it’s important to begin investing at a young age. 

You need to invest at least 50-70% of your income in your 20s if your goal is to retire early. You’d benefit from investing regardless since you can “buy income” through dividend-paying assets like stocks and MFs.

You may not be able to invest as much as a 40 or 50-year-old, but time is on your side when you’re in your 20s and it’s the most valuable asset. As the old adage goes, “Time is money”, which is true in this case.  

2. Create Goals

Investing without goals can be harmful to your financial health especially in your 20s. You need to have a clear picture of why and what you’re investing for so that you know exactly when to buy or sell. 

For example, you want a new shiny ride. That’s a medium-term goal (3 to 5 years). You might not achieve this by investing in short term assets like liquid funds that generate 3 to 6% returns.

Instead, you may have to invest in medium-term assets like debt funds, large-cap funds, and more that generate 8 to 12% returns over 3+ years. That’s why goals and goal-based investing is important. 

You’d benefit from following Cube’s perfect portfolio model. It sets you up for every weather by splitting your investments into various buckets:

  • Protection bucket (insurance)
  • Short-term bucket (0 to 3 years)
  • Medium-term bucket (3 to 5 years)
  • Long-term bucket (5+ years)

Download Cube To Know More

3. Get Expert Advice

20-year-olds these days have access to armchair experts from around the globe. They’re armchair experts for a reason - they have no skin in the game or downside risk to spouting careless advice. 

That’s why it’s important for 20-year-olds to get expert advice from proven advisors like Wealth First and RIA, Rick Holbrook who have been in the industry for 60+ years combined. 

Expert advice can help you build wealth the right way and save you from making bad investment decisions. More importantly, there’s a cost involved in making bad buys yourself that advisors negate. 

It's not lost money - it’s lost opportunities. Advisors like the ones on Cube can help you get in at the right time so that you’re set up for success in the future. Download Cube Wealth now to know more.

Mistakes To Avoid When Investing In Your 20s

1. Not Investing At All

Not investing in your 20s has severe downsides. The headstart that we spoke about earlier goes away. Moreover, your wealth will stagnate if you don’t invest in inflation-beating assets. 

An average bank savings account will generate returns of 3 to 4% at the most. But an equity mutual fund with average returns of 12% may help you beat inflation by compounding month on month. 

2. Investing Using Bad Advice

The biggest mistake you can make while in your 20s is investing based on trends and popular opinion on social media from regular folks and billionaires alike. 

There’s a chance you might end up investing in a shady crypto asset or worse, a pyramid scheme. You must avoid this at all costs. The reason behind this is rooted in logic - everybody’s different. 

Thus, every investor’s portfolio and investment goals will be different too which is why a one size fits all approach may not work. A better approach would be to give yourself time to learn and research.

At the same time, you’d benefit from consulting a Cube Wealth Coach. They’ll help you understand where you should invest your hard-earned money across tried and tested assets.  

3. Splurging Without A Plan 

Goals are crucial. But you already knew that. However, the average 20-year-old of today has an expensive lifestyle compared to someone in the 1980s. 

We want the latest gadgets, high-speed internet, fancy restaurant dates, staycations, Amazon products, Nike t-shirts, Denim jeans, and more. That’s why it’s extra hard to save and invest money.   

Truth be told, uncontrolled splurging on impulse buys and unnecessary products may lead to unwise investment decisions (or no investment decisions at all). 

No investments mean no financial growth (unless your dad is Elon Musk). That’s why you need to have a plan when investing in your 20s so that you don’t deprive your future self of comfort and freedom. 

Following budget rules like the 50-30-20 rule could be helpful. Moreover, talking to a Cube Wealth Coach can help you budget and invest wisely. 

4. Other Popular Mistakes

A. Investing In Poor Quality Assets

Investing in your 20s is a good idea. But investing in bad assets in your 20s is a sure-shot way to rob yourself of financial stability and growth. The shady crypto-asset we spoke about earlier is an example. 

Thus, you’d benefit from getting a reliable app like Cube Wealth that gives you access to trusted investment advice for assets like mutual funds and US stocks. Invest In Top Quality Assets Now

B. Investing In Too Few Or Too Many Things

Over diversification and under diversification are two sides of the same coin. Both of these strategies are risky because they tend to the extreme. The alternative is to build a balanced portfolio.

C. Not Having A Balanced Portfolio

A balanced portfolio ensures you diversify just enough within each asset type. It also prepares you for volatility since you’ll have your risk spread out across market-linked and non-market linked assets. 

Learn more about how Cube Wealth helps you build a balanced portfolio

D. Falling For Get-Rich-Quick Schemes

You can’t become wealthy overnight unless you’re Bruce Wayne or Tony Stark. It takes time to build a proper portfolio where incremental change is the magic sauce.

Anybody or any asset that promises you instant riches must be avoided when you’re investing in your 20s. It all comes back to getting reliable investment advice on trusted apps like Cube Wealth

What To Invest In During Your 20s?

1. Liquid Mutual Funds

Liquid funds are one of the most ideal investments for beginners because they are low risk, predictable, and highly liquid. They fall under the category of debt funds and are known to produce 3 to 6% returns.

Liquid funds are suitable for investors in their 20s because they can help you learn the underlying principle of investing in assets like mutual funds. Moreover, they’re better than bank FDs and savings accounts. 

Apps like Cube Wealth make it even easier to invest in the best liquid funds with curated, handpicked liquid fund recommendations based on your risk profile and goals. 

Cube also gives you access to an ATM in your pocket, the Cube ATM, which you can use to instantly withdraw up to ₹50,000 or 90% of investment in Nippon India Liquid Fund. 

Liquid Funds Highlights

1. Returns: 3 to 6%

2. Duration: 0 to 3 years

3. Minimum Investment: ₹1000

4. Risk: Low

5. Liquidity: 3 (instant using Cube ATM)

Best part? You can start for as low as ₹1000. Download Cube For Free to get started. 

2. International Mutual Funds

International funds may be suitable for 20-year-olds because they minimize effort, risk, and time that are generally a part and parcel of investing in foreign stocks like Amazon, Apple, Google, Tesla, and more. 

A mutual fund manager buys and sells global stocks based on research for you, the investor. Stock-picking is their bread and butter so you’d be tasked with picking the best international funds, not the best stocks. 

This simplifies things. But wait. It gets easier if you use an app like Cube Wealth. Cube helps you invest in the best international funds in India with top-quality advice from Wealth First. 

International Funds Highlights

1. Returns: 12 to 18%

2. Duration: 3+ years

3. Minimum Investment: ₹5000

4. Risk: Moderately high

5. Liquidity: 3 to 7 business days

Moreover, the magic of compounding, risk-based options, and investment advice can help you get a head start in your investment journey. Download Cube For Free to know more.

3. Stocks

We know two things - investing in your 20s gives you time and more risk-taking abilities. These two qualities play right into the strengths of the stock market. 

Stock indices in countries like India and the US have consistently grown over the past 4 decades. Furthermore, the time period has seen several stocks emerge from relative obscurity to become bluechip companies. 

Thus, with proper research and reliable advice from experts like RIA, Rick Holbrook on the Cube Wealth app, you can invest in stable stocks to build wealth over the long term. 

Stocks Highlights

1. Returns: 8 to 18%

2. Duration: 3 to 6 years

3. Minimum Investment: $1

4. Risk: Medium to high

5. Liquidity: 3 business days

The $1 that you see isn’t a typo. You can invest in US stocks like Tesla, Apple, Amazon, Google, Microsoft, and more for as little as $1 using Cube Wealth with advice from RIA, Rick Holbrook. 

Curious about investing in US stocks? Download Cube To Know More

4. Alternative Investments 

Alternative investments have been known to offer lucrative benefits like predictable returns, risk-based investment options, and a low minimum investment amount. 

Moreover, you can consider alternative investments to be an asset to buy in your 20s because they are non-market linked and provide diversification. 

Cube Wealth is one of the best apps for alternative investments as Cube gives you access to assets like P2P lending, Asset leasing, and Consumer loans via Merchants.

Alternative Investments Highlights

1. Returns: 8 to 12% 

2. Lock-in: Varied (no lock-in options available)

3. Minimum Investment: ₹50,000

4. Risk: Medium

5. Liquidity: Scheme-wise

Explore Alternative Investments On Cube

5. Gold

Gold is India’s favourite traditional investment option and investors in their 20s may be drawn to it. Gold has been known to be used as a hedge against inflation and stock market volatility. 

Moreover, it can be converted into valuable pieces of jewellery that can be passed down generations. However, gold carries its own fair share of problems like storage and security concerns. 

20-somethings can consider investing in digital gold instead unless you’re buying gold for sentimental reasons. Digital Gold by Safegold gives the same benefits as gold without the safety and storage concerns.  

Digital Gold Highlights

1. Returns: 5 to 7%

2. Duration: 5+ years

3. Minimum Investment: ₹1000

4. Risk: Medium to high

5. Liquidity: 3 business days

Interested in digital gold? Download Cube To Know More

6. NSC

National Savings Certificate (NSC) is a low-risk, low-reward investment option that’s backed by the government. You’ll receive a fixed interest rate per annum in exchange for your investment.

NSC carries a lock-in period of 5 years which means you can’t withdraw your investment before that. However, NSC is known to be an efficient tax saving investment. 

NSC Highlights

1. Returns: 6.8% p.a

2. Lock-in: 5 years

3. Minimum Investment: ₹1000

4. Risk: Low

5. Liquidity: 5+ years

7. PPF

A Public Provident Fund (PPF) allows you to invest up to ₹1,50,000 per financial year. Your money will be locked in for 15 years but you have the option to withdraw funds every 7 years. 

Thus, PPF is preferred for long term wealth creation. The current PPF interest rate is 7.1% per annum. You can open a PPF account in any post office, nationalised bank, and select private banks. 

PPF Highlights

1. Returns: 7.1% p.a

2. Lock-in: 15 years

3. Minimum Investment: ₹500

4. Risk: Low

5. Liquidity: 5+ years

How To Start Investing In Your 20s?

You have an advantage if you’re in your 20s - you’re tech-savvy. That’s why you’d benefit from using the Cube Wealth app. Cube is a no-nonsense, simple, and intuitive app that gives you access to:

  • Mutual funds
  • US stocks
  • Asset leasing
  • P2P lending
  • Consumer loans via Merchants
  • Digital gold

But that’s not all. Cube gives you access to investment advisory that wasn’t easily available to previous generations. You can get buying and selling advice from:

  • Wealth First - Mutual funds
  • RIA Rick Holbrook - US stocks

Wait. There’s more! Cube’s unique features like QuickSIP and SuperSIP ensure that you don’t have to waste another minute to build wealth. Download Cube Wealth now to know more.


Q. What should I invest in during my 20s?

Ans. You have the unique advantage of more time and the ability to take more risks if you’re in your 20s. Thus, you can invest in assets like mutual funds, US stocks, P2P lending, and more using apps like Cube Wealth.

Q. What should I do with my money in my 20s?

Ans. You must save and invest your money the right way in your 20s to set yourself up for financial freedom. You can start by creating goals, learning about various assets, and getting an app like Cube Wealth.  

Q. How do I start investing in my 20s?

Ans. Investing in your 20s can seem daunting at first. But apps like Cube Wealth make it easier for you to start investing with advice from leading experts like Wealth First and RIA, Rick Holbrook. Get Started Now


Investing in your 20s is an investment in your future. By following these guidelines, you can maximize your wealth-building potential, secure your retirement, and achieve financial freedom. It's a journey that requires discipline, patience, and continuous learning, but the rewards are well worth the effort.

Priya Bansal
Curious about personal finance and all things money. Can either find me reading a book or dancing to a tune.

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