You know you want to invest. You know you need to invest. But honestly, how do you start investing? Who do you trust? Do you pay someone to help? How do you know you're not going to be ripped off? Or even worse - how do you know you're not going to lose all your money?

For 20-somethings, investing is important and you know it. In your 20s, time is on your side, and the more you save and invest now, the better off you'll be later.

But, frankly, getting starting investing after college is confusing. There are so many options, tools, thoughts, blogs to read about, and more. What the heck do you do?

I'm going to share my thoughts on what you should do to start investing after college when you're 22-29 years old. Let's dive in.​

Be sure to check out the other articles in this series:

• Getting Started Investing In High School Or Younger
• Getting Started Investing In College​

Why Start Investing Early?

​According to a Gallup Poll, the average age investors started saving is 29 years old. And only 26% of people start investing before the age of 25. 

But the math is simple: it's cheaper and easier to save for retirement in your 20s versus your 30s or later. Let me show you.

If you start investing with just $3,600 per year at age 22, assuming an 8% average annual return, you'll have $1 million at age 62. But if you wait until age 32 (just 10 years later), you'll have to save $8,200 per year to reach that same goal of $1 million at age 62.​

Here's how much you would have to save each year, based on your age, to reach $1 million at 62.

Just look at the cost of waiting! Just waiting from when you're 22 to 29, it costs you $2,800 more per year, assuming the same rate of return, to achieve the same goal. 

That's why it's essential to start investing early, and there is no better time than after graduation.

Do You Need A Financial Advisor?

So, if you're thinking of getting started investing, do you need a financial advisor? Honestly, for most people, they don't. But a lot of people get hung up on this need for "professional" advice.

Here are some thoughts on this subject from a few financial experts (and the overwhelming answer is NO):​

The fact is simple: most people getting started investing after college simply do not need a financial advisor. I think this quote sums it up best for young investors:

But are there circumstances when talking to a financial advisor can make sense? Yes, in some cases. I believe that speaking with a financial planner (not a financial advisor) can make sense if you need help creating a financial plan for your life.

Simply put, if you are struggling to come up with your own financial plan (how to save, budget, invest, insure yourself and your family, create an estate plan, etc.), it could make sense to sit down and pay someone to help you.

But realize that there is a difference between creating a financial plan you execute and pay a fee for, versus a financial advisor that takes a percentage of your money you manage. For most investors after college, you can use the same plan for years to come.

In fact, we believe that it really only makes sense to meet with a financial planner a few times in your life, based on your life events. Because the same plan you create should last you until the next life event. Here are some events to consider:

• After graduation/first job​
• Getting married and merging money
• Having children
• If you come into significant wealth (i.e. inheritance)
• Approaching retirement
• In retirement

You see, the same plan you create after graduation should last you until you're getting married. The same is true at the next life event. Why pay a continual fee every year when nothing changes for years at a time?

​Robo-Advisor Or Self Directed?

So, if you don't go with a financial advisor, should you go with a Robo-Advisor? This could be a great option if you "don't want to really think about investing, but know you should."

Honestly, you still need to think about it, but using a robo-advisor is a great way to have an automated system take care of everything for you. Plus, these companies are all online, so you never have to worry about making appointments, going to an office, and dealing with an advisor that you may or may not like.

Robo-advisors are pretty straight-forward tools: they use automation to setup your portfolio based on your risk tolerance and goals. The system then continually updates your accounts automatically for you - you don't have to do anything.

All you do is deposit money into your account, and the robo-advisor takes it from there.​

If you want to go the Robo-Advisor route, we recommend using one of the two below. For reference, WealthFront is free for the first $10,000 if you want to give them a try. See the two options below:

• WealthFront - WealthFront is a great robo-advisor for those with money to invest but don't want to deal with it. Wealthfront's service really shines with taxable accounts, and service is free for accounts under $10k. Click here to check out WealthFront.
• Betterment​ - Betterment is a great robo-advisor for young investors. They make investing easy for beginners by focusing on simple asset allocation, goal setting features, and low-cost portfolio management. Click here to check out Betterment.

What Type Of Account Should I Open?

This is what makes investing complex - there are just so many different factors to consider. We've touched on a couple, and now let's dive into what account you should consider opening.

Employer Plans - 401k or 403b​

First, for most recent graduates, focus on your employer. Most employers offer a 401k or 403b retirement plan. These are company sponsored plans, which means you contribute, and your company typically contributes a matching contribution.

I highly recommend that you always contribute up to the matching contribution. If you don't, you're essentially leaving free money on the table and giving yourself a pay cut.

If you're comfortable with contributing up to your employer's match, my next challenge would be to contribute the maximum allowed each year. As of 2016, that amount is $18,000 for people under 50. Just realize how much money you will have if you always max your 401k contributions.

Individual Retirement Accounts - Roth or Traditional IRAs

Next, look at opening an individual retirement account or IRA. There are two main types: a traditional IRA and Roth IRA. The benefit of these accounts is that the money inside the account grows tax free until retirement. The downside is that there are limitations on withdrawing the money before retirement. If you're saving for the long-run, these accounts make sense. But don't leverage them if you want to take the money in just a couple of years.

The traditional IRA uses pre-tax money to save for retirement (meaning you get a tax deduction today), while a Roth IRA uses after-tax money. In retirement, you'll pay taxes on your traditional IRA withdrawals, but you can withdraw from the Roth IRA tax free. That's why many financial planners love a Roth IRA.

In 2016, the contribution limits for IRAs is $5,500. You should focus on contributing the maximum every year.

How To Balance Contributions To Multiple Accounts Beyond A 401k And IRA

There is a "best" order of operations of what accounts to contribute and how much to do at a time. We've put the best order of operations to save for retirement into a nice article and infographic that you can find here.

Where To Invest If You Want To Do It Yourself

Okay, so you how have a better sense of where to get help, what account to open, but now you need to really think about where to open your account and have your investments.

When it comes to where to invest, you should look at the following:

• Low Costs (Costs include account fees, commissions, etc.)
• Selection of Investments (especially look for commission free ETFs)
• Website Ease of Use
• Great Mobile App
• Availability of Branches (it's still nice to go in and talk to someone if you need to)
• Technology (is the company on the forefront, or always lagging the industry)​

We recommend Fidelity Investments to be your broker of choice.  Why? Because they are extremely low cost, have a great website and mobile app, and they offer a lot of services (including financial planning) if you need help.

We've reviewed most of the major investment companies, and compare them here at our Online Brokerage Comparison Tool. Don't take our word for it, explore the options for yourself.

How Much Should You Invest?

If you're looking to start investing after college, a common question is "how much should I invest". The answer for this question is both easy and hard.

The easy answer is simple: you should save until it hurts. This has been one of my key strategies and I like to call it front loading your life.  The basics of it are you should do as much as possible early on, so that you can coast later in life. But if you save until it hurts, that "later" might be your 30s. 

So what does "save until it hurts" mean? It means a few things:

• First, you should make saving and investing mandatory. The money you want to invest goes into the account before anything else. Your employer already does this with your 401k, so do it with an IRA too.
• Second, challenge yourself to save at least $100 more beyond what you're currently doing - make it hurt.
• Third, work towards either budgeting to achieve that extra $100, or start side hustling and earning extra income to achieve that extra $100.

Here are some goals for you:

• Max Out Your IRA Contribution: $5,500 per year, or $458.33 per month
• Max Out Your 401k Contribution: $18,000 per year, or $1,500 per month​
• Max Out Your HSA (if you qualify for one): $3,350 for single per year, or $6,750 per family per year
• If you side hustle to earn extra income, max our your SEP IRA or Solo 401k

Investment Allocations In Your 20s​

This is one of the toughest parts of getting started investing - actually choosing what to invest in. It's not actually tough, but it's what scares people the most. Nobody wants to "mess up" and choose bad investments.

That's why we believe in building a diversified portfolio of ETFs that match your risk tolerance and goals.  Asset allocation simply means this: allocating your investment money is a defined approach to match your risk and goals.

​At the same time, your asset allocation should be easy to understand, low cost, and easy to maintain.

We really like the Boglehead's Lazy Portfolios, and here are our three favorites depending on what you're looking for.​ And while we give some examples of ETFs that may work in the fund, look at what commission free ETFs you might have access to that offer similar investments at low cost.

Conservative Long Term Investor

If you're a conservative long-term investor, who doesn't want to deal with much in your investment life, check out this simple 2 ETF portfolio.

Moderate Long Term Investor

If you are okay with more fluctuations in exchange for potentially more growth, here is a portfolio that incorporates more risk with international exposure and real estate.

Aggressive Long Term Investor

If you're okay with more risk (i.e. potentially losing more money), but want higher returns, here's an easy to maintain portfolio that could work for you.

Things To Remember About Asset Allocation

As you invest your portfolio, remember that prices will always be changing. You don't have to be perfect on these percentages - aim for within 5% of each one. However, you do need to make sure that you're monitoring these investments and rebalancing them at least once a year.

Rebalancing is when you get your allocations back on track. Let's say international stocks skyrocket. That's great, but you could be well above the percentage you'd want to hold. In that case, you sell a little, and buy other ETFs to balance it out and get your percentages back on track.

And your allocation can be fluid. What you create now in your 20s might not be the same portfolio you'd want in your 30s or later. However, once you create a plan, you should stick with it for a few years.

Here's a good article to help you plan out how to rebalance your asset allocation every year.

Final Thoughts​

Hopefully the biggest takeaway you see if you're looking to start investing after college is to get started. Yes, investing can be complicated and confusing. But it doesn't have to be.

This guide laid out some key principals to follow so that you can get started investing in your 20s, and not wait until later in your life.

Remember, the earlier you start, the easier it is to build wealth.​

The post How To Start Investing After College For 22 – 29 Year Olds appeared first on The College Investor.