Did you know that nearly two-thirds of forty-year-olds have less than $100,000 in savings? Sadly, if you wait until this late to start saving, then you will need much more money than if you started earlier.
And that’s a shame because many people procrastinate investments. After all, it seems too complicated. While it does take some effort, learning how to get started investing doesn’t have to be a headache.
To prove it to you, we’ve made this article to help you. In it, we’ll go over the basics of investing. It doesn’t matter if you want a completely hand-on or hands-off approach — we’ll help you with both. That way, you can pick the investment method that you feel most comfortable with. Let’s get started!
1. Choose the Best Options for Your Needs
The first thing that you need to decide is how you specifically want to approach investing. Ultimately, the decision comes down to whether or not you want to be hands-on with your investments or hands-off.
But, there are three different options that you can choose from. The first way is by choosing your stocks and stock funds to invest in. The biggest benefit of this method is the control that you get over where your money goes.
However, it also requires quite a bit of time and knowledge. As such, if you don’t want to be learning investment strategies and monitoring the market, then this way might not be for you. Instead, consider going with an expert.
There are tons of independent advisors out there that can recommend the best way to invest your money. The biggest benefit of this method is that you don’t need to worry about the status of your money.
Someone else is handling all of the stress. However, the expert will charge a fee at the end of the day. However, most investors can easily pay this fee with the money they make from their investment.
The last method is to make investments into your employer’s 401(k). This is a long-term, hands-off method that doubles whatever you put into the account. Just keep in mind that you won’t have access to the funds for a while.
2. Select an Investing Account
Now that you’ve picked an investment method, it’s time to start an account. If you’re going the hands-on DIY method, then you will need a brokerage account to get started. A broker will allow you to start an individual retirement account (or IRA).
From there, you can choose what stocks to invest in. Just make sure that you choose a broker that offers fees and investment selections that align with your needs. If you’re leaning toward a more passive method, then you don’t need a brokerage account.
Instead, a robo-advisor account. These types of companies will ask about your investment goals. Then, they’ll build you a portfolio that can achieve these goals.
In exchange, they take a small percentage of your investment. Alternatively, you can also choose a human advisor. However, keep in mind that they will likely be a lot more expensive.
3. Set a Budget for Your Investments
Next, you need to decide how much you’ll be investing. This depends on factors like how much you make, the cost of the shares you want, and your age. Different budgets will require different amounts.
You shouldn’t invest the money that you need for things like housing, groceries, and debts. However, you should budget an amount at the end of the month that you can put toward your portfolio.
Even $100 can make a difference. If you aren’t sure how to calculate your investment budget, then speak to an accountant.
4. Prioritize Long Term Investments
Avoid looking at investments through a short-term lens. This is a good way to lose a lot of money. Instead, think about the long term. Passive stock market investment strategies can bring a retirement of 10% each year.
As such, if you let this sit for a few decades, then it can blossom into a retirement fund. Remember, this is a marathon, not a sprint. So, be patient and go with safe investments over risky ones.
5. Manage Your Portfolio
Most of the time it won’t do your investments (or your mental health) any favors by obsessively monitoring daily fluctuations. However, that doesn’t mean that you shouldn’t be checking your investments and managing them as you see fit.
We recommend taking inventory of your portfolio a couple of times each year. During this check-up, you should make sure that your investments are aligned with your current goals.
For example, if you’re nearing retirement, then you should make sure that you’re investing conservatively. That way, you don’t lose the money that you won’t have time to make up. You should also make sure that your portfolio is diverse.
If you’re only investing in one thing, then a market crash could tank all of your investments. By spreading your money over a variety of industries you reduce the amount of liability that a specific crash might cause.
For example, if you’re only investing in entertainment and crypto companies, then you might want to dive into real estate investment. Make sure to view here for more information on how these types of investments can lead to a more diverse, and safe, portfolio.
Enjoy Learning How to Get Started Investing? Keep Reading
We hope this article helped you learn how to get started investing. As you can see, the earlier you get started with your investment strategy, the more likely you are to be successful.
So, pick the option that best suits your needs and get to it. As long as you follow the advice on this list, then you’re already off to a great start!
Did you enjoy this article? If the answer is yes, then you’re in the right place. Keep exploring to find more topics that you’re sure to love.