Top 7 Tips for Getting Started Investing
In the modern economy, investing is one of the best ways to get ahead during your working years. While not a replacement for savings, choosing an investment strategy can allow you to grow your nest egg with peace of mind while still enjoying life and not adding extra work to your busy schedule. Check out the tips below on our favorite ways to start investing and building a brighter future for you and your family.
Pick a Strategy
When you want to start investing, it's important to consider how much risk you want to take. Investments with higher returns generally also have higher risk of losing money. The Motley Fool points out that if you're younger, you may want to make investments with greater risk because you have time to recover if they don't pan out. If you're older, you may want to stick to safer investments in order to protect what you already have.
If you have already maxed out your 401k for the year, consider contributing to a Roth IRA instead. Dave Ramsey explains that investments in a Roth account grow tax-free and only contributions are taxed - meaning that when money comes out after retirement, you don't pay any taxes on that amount. This can add up to massive tax savings if your account has grown in value over many years.
Check Out ETFs
ETFs are one of the easiest ways to get exposure to many different companies and diversify your investments. The College Investor explains that ETFs or Index funds are investment vehicles that you can buy and sell like stocks but that are actually comprised of stocks from many different companies. The Dow Jones is the most well-known index fund, but there are thousands to choose from to suit your needs and risk profile.
Set Up Auto-Transfers
If you have a steady income and want to invest on autopilot, The Motley Fool suggests setting up auto-transfers into an investment account. Many apps and brokers will help you set these up, then will automatically take money from your bank account balance each month to buy more of a designated investment vehicle like a particular stock or ETF. It's a hands-off way to grow your nest egg without thinking about it too much.
Check Out Investing Apps
The past decade has seen an explosion of apps designed to help you get started investing. The College Investor advises checking out apps like Robinhood or Acorns that make investment decisions easy and can help you make regular contributions to your account - some even offer free stocks and other incentives for smart investing behavior.
Talk to a Professional
If you're really serious about learning how to invest, the best path is to talk to a professional. The Balance suggests talking to an adviser from your savings bank or another local financial institution who can help you better understand investment risk and the types of strategies and accounts that are available to help maximize your returns while keeping your money safe.
Investing can seem scary, especially when there is so much complexity and risk. These tips can help get you started on a journey of learning and discovery that will help you achieve a stronger financial footing that can last a lifetime. Don't wait and start learning more about investing today!