This is the second step in our complete series of Getting Started Investing. If you’re a beginner who’s looking to make your first investment and build wealth for the future, then read on.
If you haven’t started investing yet, NOW is the time. No seriously, right now!
Don’t make investing more complicated than it needs to be, and don’t be afraid of taking action. The pain of not taking action will worse when retired and not having enough money saved. “I wish I saved less when I was younger” — said by no one in retirement.
Go open an online brokerage account and enjoy the benefits of investing early. If you are young, time is on your side.
You will have more time to bounce back from mistakes. It’s a rite of passage for every investor to screw up miserably. This is totally fine when you are just starting out. Chances are: (a) you are young enough that you have time to bounce back and (b) you haven’t invested enough to lose significantly yet. Make mistakes, learn from them, and move on.
Volatile markets are easier to recover from. The market goes up and down constantly, which can make for large gains and losses in your portfolio. Thankfully, over time the market trends up. By investing early, you can weather that volatility more easily than someone close to retirement.
It’s easy and cheap! Anyone can invest these days and it doesn’t take much money to do so. Buy and trade ETFs quickly at low trade fees. Look at that, you’re an investor now!
Albert Einstein once declared compound interest to be “the most powerful force in the universe.”
To read more about why NOW is the time to invest, check out 4 Reasons Why Now is the Right Time to Start Investing. I know some of you are thinking, “I can’t invest, I’m broke!”, so let’s talk investing while you’re broke. Some of you may be broke-broke, but I bet a large portion of you just need to re-prioritize and adjust your budgets.
Here’s and example of the magic of compound investing and what it can do over a long period of time.
Next up, here’s what to do when you want to invest, but don’t have the money.
Make Room in Your Budget
Can you cut out $50-$100 of spending each month? I’m willing to bet that you can. That’s a great start! You could also consider using windfalls (tax refunds, anyone?) or selling off unwanted household items to direct more money towards investing.
Save Up Some Seed Money
Diversification is difficult with a small amount of money. Open up a savings account today and start saving up for future investing. A thousand dollars is a good number to start with, although more is always better!
Make Savings Automatic
Try funding your “seed” account with automatic direct deposit from your paycheck. Will you really miss $50 per pay period? Probably not. But by year end you will have saved $1,200 with little to no effort.
Not Sure Where to Begin? Here’s What To Do!
If you are just starting out investing can be confusing. This is why we’ve reviewed pretty much all of the financial services out there. For someone just starting out we recommend one or both of the services listed below. Both make saving and investing automatic and easy. In addition, they are on our recommend list of investment services.
Acorns is a microsavings service where any credit card purchase you make it will round-up the spare change and invest that difference. It’s a painless way to start savings even if you claim you can’t save. Unfortunately, Acorns should be primarily for short-term savings and does not offer any retirement account options. This is where Betterment comes in.
Betterment is a robo advisor service and is for more long-term goals. Instead of having to figure out where to invest your money Betterment does this for you. You can start with no money and can grow your retirement nest egg from there. Plus Betterment not only offers taxable accounts but IRAs well. Which means you can start planning for your golden years now.