Quora Answer: What is the Ideal Way for a 22-Year-Old to Invest $20,000 for the Long Term?

The following is my answer to a Quora question: “What would be the ideal way for a 22-year-old to invest $20,000 for the long term?”

If, for the long term, I am assuming an investment horizon of about 20 years.  I am also assuming that you are at a learner level with a balanced risk profile, the average.  In such case, I suggest you divide your money in two portions 60:40.  For the 60%, put it in higher risk funds, mainly equity securities spread over several markets and growth regions.  This will either require research, or the advice of a competent financial advisor.  The other 40% is to be put in safer securities, such as bonds.  This ensures that you do not lose all of your money in a market downturn.  If you do this properly and invest conservatively, you are conservatively looking at a projected ROI of between 4.5 to 6% pa.

Alternatively, you can put the funds in a single-premium insurance-linked plan which manages your funds for you.  Since you are young, the mortality charge is negligible.  This $20,000 will also give you a death benefit coverage of about $25,000, or the investment value, whichever is higher.  The returns are similar to the fund method above.