Investing in your health is something that everyone should consider doing. However, at a younger age, this may seem like a lower priority. You may feel healthy at the moment and figure you have time to make any long-term investments. However, planning ahead can save you from any unexpected stress in the future. Your health is not something that should be taken lightly, especially with the current health crisis going on. Here are some suggestions for health investments to make in your 20s.
Why You Should Invest
While it may be tempting to put off investing for a few years, there are some benefits to starting early.
The main benefit is the idea of compound interest. This type of interest not only allows you to earn interest on the money you initially invested, but earn additional interest as well. This way, you are putting away a smaller amount of money now that will grow on its own, instead of having to make a larger investment when you get older.
Health Investments To Make In Your 20s
1. Health Savings Account
A health savings account is a tax-advantaged account. This account allows you to set aside pre-tax dollars and tap into the account if you ever need to cover health insurance deductibles or out-of-pocket costs.
Having this account will help to manage the increasing cost of health care. The account will also help to save up money for your retirement plan.
2. Life Insurance
Life insurance is a contract that guarantees an insurer will pay a sum of money to named beneficiaries when the policyholder dies, in exchange for premiums the policyholder pays during their lifetime. Investing in life insurance at a young age lets you plan ahead for any unexpected events. It also makes sure you’re not leaving any personal matters unsettled once you pass away.
If you have a family, have student loans, have a mortgage, or want to pay for your own funeral costs, investing in life insurance is very valuable. Without a proper insurance plan in place, these expenses will be passed down to your family members. Insurance plans are often cheaper than people expect, but neglecting to invest at a younger age may make it more expensive to qualify for certain plans later on.
Health issues are more likely to occur later in life, and you don’t want to worry about finding the right plan while dealing with the stress of these issues. Another thing to consider is that many people rely on employers to provide coverage for certain health plans. With the rise in unemployment due to the pandemic, you may be at risk of losing coverage.
This is why investing in your own plan will provide you with stability regardless of your current employment status.
3. Health Insurance
Did you know that 28% of adults under 65 are underinsured? If this is you, then consider investing in a health care coverage plan today.
Health insurance is a type of insurance covering one’s medical, surgical, prescription drug, and possibly dental expenses. The insurer can either reimburse the policyholder or pay the health care provider directly.
When looking for a plan, don’t dismiss ones with higher premiums. Usually, the lower the premium, the higher your deductible, and the less comprehensive your coverage may be.
4. Retirement Plan
This is one of the health investments to make in your 20s. In your 20s, you are probably not thinking about your retirement plan, since retiring may seem far off. But the sooner you make a plan, the sooner you can start saving money to afford the lifestyle you envision during retirement.
Start considering what major expenses will come up once you retire, such as health care and housing. Planning how you will pay for ongoing expenses and live comfortably will make the retirement process go much smoother down the road.
Tips For Investing
1. Set Goals
Before you start investing, have a goal in mind and understand what you want to get out of your investment. Consider creating a reverse budget, which means focusing on how much you will need to save as opposed to spend.
If you are saving for a goal that you want to achieve in less than five years, invest using cash as opposed to investing in the stock market. This is because of the changing nature of the stock market and the risk of losing the money.
2. Max Out Your Retirement Account
Many retirement accounts offer tax-free compounding of your earning, income, and capital gains.
The first step before taking advantage of this perk is to make sure you have enough money invested in your employee-sponsored retirement plan to earn a match. Once you receive the match, also try maximizing your contributions to other tax-advantaged accounts, like your individual retirement account.
3. Don’t Forget To Save Money For A Rainy Day
Make sure to set up an emergency savings fund. You never know what unexpected expenses could lie ahead. Often, when you’re younger, you have fewer expenses to think about. But that doesn’t mean you can’t start saving for potential expenses, such as car repairs or a mortgage.
In general, this fund should cover 3 to 12 months of expenses. Try adding the fund to an online account rather than a primary checking account to earn a higher interest rate and reduce the urge to access these funds for non-emergency uses.
Don’t Wait To Invest In Your Health
As a 20-year-old, your health may not be something you are worried about investing in at the moment. You probably figure you have time to do this later on. However, unexpected health issues can occur at any time, which is why it’s important to plan ahead.
Consider investing in a health savings account, proper health insurance, life insurance, and a retirement plan. Before investing, set goals and be sure to save money for a rainy day.
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