Welcome to Day 8 of the Master Your Money course!
I always say the first thing you need to do if you want to start investing is to just jump in. However, what if you don’t really even know how to start investing?
If you are like many out there, you may not know how to start investing your money.
Investing your money can be a scary, stressful, and overwhelming topic to tackle. With today’s post, I hope to make it easier than ever with my beginner investing tips so that you can start investing your money and building a retirement fund as soon as possible.
Just as a refresher, you want to invest so that you can:
- Retire one day;
- You never know what may happen in the future, so preparing now is important;
- Allow your money to grow over time.
Investing is important because it means you are making your money work for you. If you weren’t investing, your money would just be sitting there and not earning a thing.
This is important to note because $100 today will not be worth $100 in the future if you just let it sit under a mattress or in a checking account. However, if you invest, then you can actually turn your $100 into something more. When you invest, your money is working for you and hopefully earning you income.
For example: If you put $1,000 into a retirement account that has an annual 8% return, 40 years later that would turn into $21,724. If you started with that same $1,000 and put an extra $1,000 in it for the next 40 years at an annual 8% return, that would then turn into $301,505. If you started with $10,000 and put an extra $10,000 in it for the next 40 years at an annual 8% return, that would then turn into $3,015,055.
Below are the steps you should take so that you can learn how to start investing your money.
1. Start saving your money.
One of my top investing tips is to start setting aside money for it right now. One of my favorite investing-related quotes is:
The best time to invest was yesterday; the second best is today!
In order to invest your money, you need to start setting aside money specifically for it. The amount of money you save so that you can invest is entirely up to you, but I think the more the better.
2. Do your research.
Before you start dumping your money in the stock market and other investments, it’s a good idea to know what you’re putting your money towards.
Reading about various investment-related tips and research will help you in the long run if you want to know how to start investing.
3. Find an online brokerage or someone to manage your investments.
There are two main things you could do with your money. Either invest your money yourself such as through an online brokerage or find someone to manage your investment portfolio for you. You will need to take part in one of these options to actually start investing your money.
There are many online brokers for you to choose from. My favorites include:
- Motif Investing – Motif Investing allows individuals to invest affordably. This approachable investing platform makes it easy to buy a portfolio of up to 30 stocks, bonds or ETFs for just $9.95 total commission.
- Betterment – Betterment offers an affordable way to invest your money. They have over 100,000 customers and over $2.5 billion has been invested through their service.
- Vanguard – I absolutely love Vanguard and I recommend you check them out.
4. Decide how you will invest.
After you open your brokerage account, you will want to decide how exactly you will invest your money.
How you invest depends on your risk tolerance, the time period for which you are investing (when will you retire?), and more. Generally, the sooner you need your funds the less risk you will take on and the longer your time period then the more risk you may be willing to take on.
Choosing the stocks you invest in is not the easiest thing ever because no one knows what will happen in the future. However, you will have to choose things to invest in if you want to get started investing. I recommend researching the different options out there, researching specific companies, and more.
Please remember that I am not an investment professional and that you should do your research when choosing who/what to invest in. Receiving investing tips from a qualified professional is also a great idea if you have further questions.
5. Regularly track your investment portfolio.
So, you finally have invested your money.
The next step is to regularly track the things you have invested in. This is important because you may eventually have to change what you are invested in, put more money towards your investments, and so on.
Now, the key here is to not go crazy. You do not want to become a person who checks their investments every hour of the day. That won’t help you at all as small changes in the stock market most likely won’t matter to you, especially if you are investing for the long-term.
However, you do want to check your progress occasionally as things may change in the market, with what you’re invested in, and you may change yourself.
6. Continue the steps above over and over again.
To continue investing well into the future, you will want to continue the steps above over and over again. Now that you know what steps need to be done in order to invest your money, it only gets easier from here.
The hard part is done!
Well, that's it for today. Tomorrow you will receive the next lesson that will teach you about the importance of a financial emergency list. Stay tuned!
Michelle Schroeder-Gardner MakingSenseofCents.com