Investing does not have to be a scary word, even for those who don’t have any experience. As with everything in life, you have to start somewhere, so start letting your money work for you. Making investments is not some complicated rocket science for most people, you just need to know the basics and make rational and sound choices.
1. Save and Plan
Becoming an investor has to start well before you actually purchase any investments. You need to make sure your financial health is in order, and that means saving first and ensuring that you have backups such as emergency funds. Investing should be done with the money that you can live without on a daily basis plus a bit extra to be cautious.
See what you can logically put aside every paycheck for a year before really getting into making decisions. This way you can have a small lump sum to play with, and you and your family will still be in a comfortable financial situation. You certainly want to save for the future, but you also need to live today.
2. Employer Plan
If you are a full-time employee there is a good chance that your employer has some form of retirement savings plan available. This could be a 401K or other form of investment, and it is worth your time to see what is being offered. Some employers even go as far as adding to the investment based on your own contributions.
These investments are going to be extremely stable, but you have to remember you are focusing on long-term goals and retirement, so the money is not going to be available for some time. An employer plan is a wonderful way to start investing if you are struggling to pull the trigger.
3. Exchange-Traded Funds
These types of funds have a lot of potential for people with low investment capital and beginners alike. There is a ton of variation, liquidity options, and ultra-safe investments to keep you happy. Exchange-traded funds are comprised of a number of different securities that are traded throughout the day, and the amount of choice and diversity is very appealing for new investors.
4. Index Funds
Index funds are a low-cost entry, hands-off approach to investing where you are purchasing a portfolio of stocks, and bonds that are linked to the progress of your desired financial index. The S&P 500 is a very popular choice among investors, but, depending on who you go through, you can get index funds to mirror others.
5. Mobile Apps
With the advent of the smartphone and tablet, apps are becoming the go-to way to do just about everything in life. There are a number of great apps available for both iOS and Android that make managing your money, investing, and getting advice much simpler than it ever has been; and you should take advantage.
There are a number of highly-reviewed apps, such as:
- SoFi Investing
- TD Ameritrade
These are just a sample of some of the top investing apps available, and they all offer various pros and cons depending on your level of experience and financial goals. SoFi is a great app for beginners as it does a great job of leading you through the basics, and it also has automated features.
These computer programs use specific algorithms to give you advice on your investments via an app or website. There is a great Betterment review, that goes into detail about one of the top Robo-advisors around. You take the guess-work out of investing and the Robo-advisor will get you started in investing without any of the headaches.
Another great choice would be M1, as there are no annual fees, no minimum balances, and it also offers dynamic portfolio balancing to keep you financially healthy. There will be a service out there to suit anyone’s investment needs, and it is a good idea for beginners to check them out.
7. Target Date Mutual Funds
Mutual funds are a very popular form of investment, as they give you a portfolio of various investments that have minimal risk. A target-date fund is exactly how it sounds, you purchase a mutual fund that has a target date to cash out. This is a great idea for saving for retirement, education, or even a home in the future.
8. Investing is for Everyone
As you can see, there are a lot of different options that you have to get started with your life as an investor. It may seem slightly overwhelming at first, but with just a little bit of patience, you will see that it doesn’t have to be complicated. Take a look at some of the newer technologies that make our lives simpler, and you too can start saving to have a better and more comfortable retirement.