If you’ve been on the internet recently, chances are you’ve heard somebody talking about investing their money or about trend trading vs swing trading. From cryptocurrency to the recent Gamestop stock debacle, investing has become a hot topic that can be tough to understand. Fortunately, this quick guide will help you get started investing your money.
Start as Early as Possible
It might seem like you’re late to the investing party, but now is always the best time to get started. The sooner you start reading about investing, the more time you’ll have to learn and make money.
For secure investments that make a steady profit, compounding interest is an amazing thing. You can start with a relatively small amount of money, but that money will grow faster and faster as interest compounds. Whether you’re investing in real estate or the stock market, getting started early is important.
Decide on a Number
When you’re ready to invest, the first thing you need to do is decide how much you’re willing to invest. This number is different for everybody, and you don’t want to invest so much that you’re putting your personal finances at risk.
Do you have an employer-sponsored 401(k) or another retirement account at work? If so, you can start by investing enough to get the full company match rather than saving your money. As far as other investments go, the general rule of thumb is that you should invest about 10 to 15% of your annual salary (including the employer match). However, you can work up to that number over time.
Open an Account
In order to invest your money, you need to open an investment account first. You probably want to avoid retirement accounts, as there are restrictions in terms of when you can take your money out. Instead, opt for a taxable brokerage account. With this account, you can pull money at any time.
Traditional and Roth IRAs from Betterment, for example, are also popular investment accounts. Rather than providing a high-risk, high-reward option, these IRAs are designed to build steadily to give you a smaller, but more consistent profit over time. You can learn more about these accounts by taking an investing course.
Understand the Options
You also need to understand the available investment options before you invest. Fortunately, there’s a lot of information about investing on the internet. If you don’t want to go in blind, Cetera investment services are a great way to get help investing for a better future.
The four basic types of investments are stocks, bonds, mutual funds and exchange-traded funds. Stocks often provide a high-risk, high-reward opportunity, while bonds are the opposite. Mutual funds and exchange-traded funds are several investments grouped together into a package and are some of the most popular investment options.
Choose a Strategy
Consider your current situation, your goals and what you’re willing to risk and decide on a strategy that works for you. If you want to invest for retirement that’s more than 20 years away, you should put your money in stocks through an ETF or mutual fund.
For short-term investing, you want to opt for a low-risk portfolio. In some cases, it may be best to simply keep the money in a savings account.
Of course, you can also open an account through an investment management service to take the burden off of yourself. These services manage your investments for you, so you don’t have to make the tough decisions.
Getting started with investing may seem overwhelming, but it’s worth the effort to have the future you want. Plus, a little effort goes a long way when it comes to investing. Get started early, do plenty of research and get investment help if you need it.
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