The 7 BEST Purchases to make in your 20s

Hey guys, welcome back to the channel! In this video, we're going to be talking about seven smart purchases that I think you should make when you're still in your 20s. So I went down a bit of a YouTube rabbit hole and I saw a lot of people making different videos around this topic, so I thought I'd chime in with my own opinions.

I think when it comes down to making smart purchases in your 20s, really, I think what you're trying to do with your 20s is just set up a really strong foundation, both financially and professionally, whatever you do for a living. So I kind of came at it from that approach. I think that your 20s are really underrated, I suppose, as a decade. A lot of people kind of tend to waste away their 20s and really get stuck into their finances and setting themselves up for life in their 30s.

But as I'll talk about later on in the video, there is a massive advantage to actually getting switched on and setting that foundation when you're still in your 20s. So with that said, let's get started!

I think the first and one of the most important purchases that you can make when you're still in your 20s is literally anything that is going to help you get further along in your career or is going to make you do your profession better than the next carpenter, or the next physiotherapist, or the next doctor. A lot of people think that when they're in their profession, they just kind of tie it up and you know, this is just how my profession is.

I've just got to slug it out and have the low-paying jobs for like a couple of decades, and I'll slowly move up the ladder to those top management positions eventually. Or something like that. It's totally not the way it works; really, in most professions that is not the way it works. If you are the doctor with the best skill set, you know more than the next doctor; you have better rapport with your patients than the next doctor.

You’re just, overall, invested in becoming better at your profession when the other person hasn’t. You're going to get more clients, you're going to be more valuable as an employee, and once you are the most valuable employee you can be, then ultimately the power rests with you, right? You can ask for things like more pay, you can seek other opportunities elsewhere, you can seek better jobs. You get to those better positions faster than your peers will.

So I think that's really important to do when you're still in your 20s—to kind of upskill, put in the investment to become the better lawyer, doctor, nurse, physiotherapist, or whatever carpenter that you can possibly be.

Now moving on, the next thing that I reckon people should really look to buy in their 20s is investing books. Seriously, there is such a power in understanding the world of investing when you're still very young. So whether it be, you know, "The Barefoot Investor," or "Rich Dad Poor Dad," or "One Up On Wall Street," or "Rule One," or any of these kind of books, just start to pick some of these books up, have a read, see what takes your interest.

Because if you can actually understand things like passive investing or active investing at a fairly young age, then you are going to be in the perfect position to lay that financial foundation to set you off later in life. Because there's no doubt that people that get started with compounding their money earlier do much, much better in the long run.

There's a big difference between someone who starts compounding their money when they're 20 versus someone that starts compounding when they're at 30. So definitely get started! And then that leads into the next smart purchase in your 20s, which is actually just sinking some money in some sort of investment.

It's definitely worthwhile to learn about investing, but then also make sure you follow through and actually make an investment. Obviously, that's pretty darn important because even if you don't want to be that person that tries to pick stocks and stays up late each night studying these individual investments you want to make, there's no doubt that even if you're just participating in the stock market, you can still, if you hold for a long period of time, make an average of around seven or eight percent per year.

I can show you the charts. This is someone that starts investing when they're 20, just investing across the whole market—staying diversified and just getting the market return—retiring at 65. This is their investing journey versus someone that starts at 30 doing the exact same thing. You can see there is a world of difference.

Ten years, while it may not seem that long, it actually makes a substantial difference to the two outcomes. So definitely make sure you buy those investing books and learn about investing, but more importantly, make sure you actually make those investments when you're young because you reap the rewards later in life. You're setting that foundation now.

The next smart way to spend your money when you're in your 20s, this is one that I've only recently learned myself, is just the cost of seeing an accountant. Just go and see an accountant, talk to them about your affairs, what's going on, talk to them about your tax and your personal situation, get them to do your tax return.

Because here's the thing that I really didn't realize: most of the time, seeing an accountant actually turns out to be free because they pay for themselves. They have such an understanding of the tax laws and the tax system that a lot of the time they can save you more money than what they cost. That’s perfect. Then you just get the added bonus that they will essentially do your tax return for free.

I certainly didn't realize how valuable going to see an accountant would be until I did it recently, and man, I am so thankful. Because it's not even that they do your tax return; they make sure it's all done properly. Yes, they save you money, but they are also kind of advisors in a way—they help you structure your affairs correctly so that you can save money, not just this year but going into future years, future decades.

They can set you up for things like—they can advise you on what’s smart tax-wise when it comes to your super, if it’s smart to start a company or if it’s smart to start a trust. They can advise you on all these things from a taxation perspective, and over decades, that can save you a lot of money. So, I definitely recommend if you’re still in your 20s, maybe you’re thinking about going into business, or maybe you’ve started investing, or you’re thinking about buying a home, something like that—just go and see an accountant because they will have very valuable nuggets of information that will help you structure whatever you want to do in the most tax-effective way possible.

Now moving on from that, another smart purchase I think that most people should make in their 20s is anything that's going to help you start your own business. Now, obviously, you have to apply common sense here. I don't think you should get to a couple of million dollars of debt just to start up a business that has got a 10% chance of success. I don't think you should do that.

But I definitely think that people should not stress so much about starting a business or making some investments into starting a business while they're still young. Because I think one of the big problems we’ve got nowadays is that a lot of young people don't start their own business. I guess this is how society kind of grooms us as we grow up. We go to school, then after we finish school, we go to university, we get a degree, and that degree tells us what we're going to do for a job where we work for someone else.

But having started a couple of businesses myself now, still being in my 20s, I can see that there is such a power in a young person starting their own business. It can help you get to your goals, your financial goals, so much faster than just showing up nine-to-five working a job. You know, you're going to get a couple of thousand dollars each fortnight.

It's going to take you a very, very long time to get where you want to be just going down that route, whereas I love business because at the end of the day, you get out of it what you put into it. If you want it to be more successful, you go and get it right. You've got to work for yourself, you've got to try different things, and you've got to figure it out. You make money for yourself; you are your own boss.

I think this is definitely it, especially if you start getting the ball rolling. Then you do know that the harder you work on that, the more you're going to get out of it. I think that’s super, super powerful.

So overall, I definitely recommend starting a business. Even if it fails—I know that sounds crazy—but there are so many things that you learn from starting up your own business that if it’s not too expensive, even if it fails, I still reckon for most people it will be worthwhile just to learn how these things work and learn the potential that you can get out of a business.

Anyway, moving on, the second last thing that I think is a smart purchase for most people in their 20s is controversial: their own home. So I definitely don't think that young people should be committing themselves to like four or five decades worth of debt when they're still like, you know, 22 or something like that. But there’s a certain point, right?

So if you're renting and you can see that your rental payments are going to be quite a bit more than the repayments you might make on a home loan, then obviously it's something to think about. For a lot of people that, you know, aren’t super switched on with money, they’d only get into investing, they’d only get into business—they are just, you know, your standard nine-to-five worker—then at least buying your home, you are buying an asset. You are buying an investment.

Plus, there's the advantage that if you are buying your own home, chances are you're going to live in it for longer. So the chances that you make an eventual gain on that hire—of course we've got the tax advantage here in Australia where your main residence is tax-free, so you don't pay capital gains tax when you sell your main residence.

So there's that as well. It’s a less volatile asset than something like owning shares in a company. The real estate market tends to be a little bit stronger because, at the end of the day, everyone needs somewhere to live, so there's always a base demand for housing. There are lots of pluses for owning your own home.

Personally, I love to invest more so in businesses than in property, but for the average Joe, there's no mistake. If you can support that mortgage, obviously you don’t want to commit yourself to this crazy whopping debt, but if you can support that mortgage healthily and it's going to save you money over renting, then it makes sense because you slowly pay that off. That asset becomes yours and hopefully over time, it grows in value as well.

Even you can look at someone like Peter Lynch, who wrote one of the most famous investing stock market investing books ever, "One Up On Wall Street." He actually recommends that most people, before they get started with stocks, should take the time to look into and buy their first home. Get the house under your belt first because for most people that's just a smart, smart thing to do.

Anyway, so that is owning your own home. And then the last thing I wanted to talk about is making some super contributions. So super is something that a lot of people don’t really think about until they retire, but there's no doubt that putting money away into super is definitely a pretty smart financial plan. It's a very smart way to spend your money, particularly if you are someone that is younger.

First of all, it locks that money away until you retire, so your future self is definitely going to pat you on the back for putting that money into the super account. It's obviously when the money goes into your super account that the money in there gets invested, so it does make gains over time.

So, obviously, same as what we were talking about before, with the compounding effect, the sooner you get that money into super, the longer it's got to compound. So hopefully over time, the better returns you're going to get. And it's also super tax-effective. So if you are taxed at a marginal rate that ends up being higher than 15%, then putting money into super is going to make sense because when you put money into super, it's only taxed at 15%.

Now for me personally, because I am really focused on where I put my money, I tend to keep my money out of super just because I know that what I do with my money, I'm going to do much better than what will happen if I put that money away into super, and I’d rather keep access to that money to keep turning it into more money myself.

But for most people, it definitely makes sense to put more money into super, whether that be just asking your employer to put more of your wage—so sacrificing a little bit of your salary—up to $25,000 per year. That does include the super guarantee that your employer puts into super on your behalf.

But yeah, you can definitely take advantage of that lower tax rate up to $25,000 a year into super, and that can set you up very nicely in your 20s for a very good retirement.

So anyway, guys, they are my seven things that I would consider spending my money on in my 20s if you want to really create a strong financial base, create a really strong professional base to launch from. Yeah, I think those seven things are probably pretty good buys!

And if you can do all seven before your 30, then you are really set up well. You are going to be in a fantastic position in your 30s, 40s, and 50s, and you're going to have an absolutely awesome retirement. So anyway, guys, those are the things that I wanted to talk about.

I’d love to hear from you—what are some other things that you think are smart buys in your 20s? As a young person, what should you be sinking your money into? I’d love to hear that from you guys! Drop that stuff down in the comment section below. And of course, leave a like on the video if you found it useful or if you enjoyed it.

As I always say, it helps out heaps in the YouTube algorithm, so I really do appreciate it. But that'll do me for today, guys. Check out profitable if you did want a step-by-step guide on how to get started with either passive investing or active investing. Links down in the description below. But that'll do me for today, guys! Thanks very much for watching, and I’ll see you all in the next video. [Music]