How I Would Invest If I Were 21 Again
A Few Regrets, Some Lessons, and a Lot of Good Advice.
I’m not a financial expert, but over the past few decades, I’ve learned a lot through trial and error. In fact, if I could go back to when I was 21 — well, that would be a game-changer. I’m sure many of you reading this will relate. Now, at 63, looking back at the decisions I made in my early twenties, I can clearly see how my investing approach could have been much more strategic. The good news is that, with a bit of hindsight, I can now offer some advice that could benefit those of you who are in your early twenties today.
So, what would I do if I were 21 again? How would I invest? What would I have done differently, and why? Let me break it down for you.
1. Start Early — Time Is the Greatest Asset
Let me make this clear: starting early is one of the most powerful advantages you have when it comes to investing. If I could go back and talk to my 21-year-old self, I would tell him to stop waiting for the “perfect” moment and to just get started. In the world of investing, time in the market matters more than timing the market.
For example, if I had invested just $1,000 into an index fund like the S&P 500 in 1980, by the time I was 60, that $1,000 would have grown to roughly $35,000 (assuming an average return of 10% per year). Let that sink in for a moment. That’s the magic of compound interest.
A quick back-of-the-envelope calculation shows the power of compound interest:
- $1,000 invested at 10% annually for 40 years = $35,000
Even if I didn’t add any additional money to that initial investment, the power of compounding would have done the work for me. But I didn’t know that back then.
Takeaway: Start now. Even small amounts matter. The earlier you start, the more time your money has to grow. I would have invested in a broad-market index fund and held on for the long haul. Simple, yet effective.
Start now. Even small amounts matter.
2. Embrace the Power of Index Funds
Speaking of index funds, if I were 21 again, I would invest in low-cost, broad-market index funds. These funds, like those tracking the S&P 500 or the Total Stock Market, have proven to deliver solid, long-term returns. In fact, from 1980 to 2020, the S&P 500 had an average annual return of around 10%. Even with market crashes and corrections along the way, the long-term trend is unmistakable.
Back in my twenties, I was more drawn to individual stocks. I remember buying a few tech stocks, hoping to make a quick profit. But I soon realized that picking the “right” stocks is hard, and I didn’t have the experience or the market insights to navigate that. If I could do it again, I’d focus on low-cost index funds that track a broad swath of the market.
Picking the “right” stocks is hard
3. Build Financial Literacy Early — Knowledge is Your Best Investment
When I was 21, I didn’t know much about personal finance or investing beyond the basics. I figured that if I just “had enough” money, I could figure it out later. But I quickly learned that the more you understand about how money works, the better your decisions will be.
If I could go back, I’d spend more time reading books, listening to podcasts, and seeking out resources that explain the principles of investing, taxes, retirement accounts, and even behavioral finance. Financial literacy isn’t just about knowing what stocks are; it’s understanding how markets work, what risks you’re taking, and how to make your money work for you.
There are a ton of free resources out there today, like:
- Books: “The Intelligent Investor” by Benjamin Graham, “Rich Dad Poor Dad” by Robert Kiyosaki
- Podcasts: The Indicator from Planet Money, BiggerPockets for real estate
- Websites: Investopedia, Morningstar, NerdWallet
And here’s the thing — knowing the basics of how money works can help you avoid major mistakes. For instance, understanding the importance of saving for retirement in your 20s could prevent you from falling behind. If I’d understood the power of compound interest and tax-advantaged accounts earlier, I would’ve been way ahead in my savings and investments.
Takeaway: Invest in your financial education. The earlier you start learning, the easier it will be to make informed decisions that set you up for success down the road. It’s an investment that always pays off.
4. Diversification Is a Must
In my twenties, I didn’t pay enough attention to diversification. I put too much of my money in individual stocks or sectors that I felt “excited” about, rather than thinking about building a balanced portfolio.
If I could go back, I would’ve diversified my portfolio much earlier. A diversified portfolio spreads risk and reduces volatility. That means I would have invested across different asset classes — stocks, bonds, real estate, international equities, and perhaps even alternative investments like precious metals or commodities.
Here’s an example: If I had a well-diversified portfolio of 60% U.S. stocks, 20% bonds, and 20% international stocks back in 1980, I would’ve experienced smoother performance through various market cycles, rather than the wild swings that come with concentrated positions in specific stocks.
Takeaway: Diversification is your friend. A mix of asset classes can protect you from the volatility of the market and help you sleep at night. Don’t put all your eggs in one basket.
Diversification is your friend.
5. Avoid Debt — The Power of Financial Freedom
Another lesson I’ve learned over the years is the importance of avoiding high-interest debt. When I was 21, I didn’t fully appreciate the impact that debt could have on my finances. I wish I had known how devastating credit card debt could be, or how much it could eat away at my wealth-building potential.
The average credit card APR in the 1980s was around 18–20%. And when you’re paying off high-interest debt, it’s tough to build wealth. If I were 21 again, I’d focus on living below my means and avoiding credit card debt at all costs.
Takeaway: Stay out of high-interest debt. Focus on building financial freedom by managing your expenses and saving diligently.
Stay out of high-interest debt.
6. Take Advantage of Tax-Advantaged Accounts
When I was younger, I didn’t fully take advantage of tax-advantaged accounts like IRAs and 401(k)s. These accounts allow you to grow your wealth tax-deferred, and in the case of Roth IRAs, you can even withdraw your gains tax-free in retirement.
For example, if I had opened a Roth IRA at 21 and contributed $6,000 every year (the maximum allowable contribution for a Roth IRA in 2025) with an average annual return of 8%, by the time I turned 60, I’d have over $1.4 million. I missed out on this opportunity for years, and it’s a shame.
Takeaway: Max out your tax-advantaged accounts, especially if you’re in a lower tax bracket like many young people are. This is an incredible opportunity to supercharge your savings.
7. The Role of Investment Management Platforms
Now, let me tell you something I wish existed when I was 21 — platforms like Sela. As an investor in my 60s, I’ve learned that the right investment platform can make all the difference, particularly for young investors who are just starting out.
I would have been much better using these instead of trying to manage everything on my own with limited knowledge. In 2025, AI is really revolutionizing the way we invest. If AI had been available in my 20s, I would have been in a far better position.
Don’t underestimate the power of expert guidance in your investing journey.
If I were 21 again, I would follow these principles without hesitation: Start early, embrace low-cost index funds, stay disciplined, diversify, avoid debt, and take advantage of tax-advantaged accounts. More importantly, I would lean into modern available technology to guide and support my investment decisions.
While I can’t go back in time, I’m hoping that my experience will help you, the younger generation, avoid the same mistakes I made and start your investment journey on the right foot. Time is your greatest ally — use it wisely, and the wealth you build will be the product of consistent, well-informed decisions.
Good luck, and happy investing!
