How to start investing with any kind of budget
Before this month, the Dow Jones Industrial Average hit 22,000 for the very first time, strengthening this current bull market even more. But if you are among the many who are not quite certain what those number mean, you might still be wondering just where to begin.
The fantastic thing is that now more than ever, automated investing — or even “robo-advisory” — resources are simply a couple clicks away. Acorns, Wealthfront, and Betterment are only a couple of the newest investment programs that democratize investments by providing a simple on boarding process for aspiring new investors. This squashes the current stigma of the stock market being only for the rich and famous. That age is over — now, all spare change is welcome!
So you want to learn how to invest? Great!
Whether you are seeking to improve your savings by a couple bucks or a couple hundred bucks, there are a couple of strategies to consider before you dip your feet in the water.
Start by asking yourself where you stand now. Do you have a student loan or credit card debt? If that’s the case, understanding the rates of interest of these loans can give you a better understanding of a few things. Should you be paying these loans down first, or is the interest rate low enough that you feel your investment returns will beat the interest paid on these loans.
As an example, a credit card is almost always a debt burden that will be impossible to outperform. It will probably make more sense to spend cash paying off that debt prior to investing. The average credit card interest rate of 16 percentage is much greater than the typical seven percent return on investment — thus making the decision a fairly simple one.
Get your goals down on paper
There is no time like the present to write down your short and long term targets. Knowing what type of savings you would like to achieve in the near future — like an emergency fund or holiday fund — can help you comprehend what you can realistically manage to put toward investing. Generally, the stock market is a strong long-term investment plan. Money placed in the stock market should never be removed unless absolutely needed Identifying what you want your cash to achieve for you (and by when) is useful before starting out.
Don’t let emotions get the best of you
Investing is a gradual and continuous race which normally requires some meticulousness — not just in setting money aside, but preventing any psychological choices as the stock exchange goes up and down. Emotional investing can create a disaster in your portfolio. Consider automated buying in tools or online advisory solutions, for example LearnVest and Ellevest. These can help you navigate what makes the best sense for you personally.
Consider not doing it yourself
When mobile programs and internet tools are not your thing, and you are feeling ready to become serious about investing, consider working with a certified financial planner or an investment adviser. They will help you through the steps and stick with you while you reach your fiscal objectives and life goals — if that means a marriage, new condominium, livelihood, infant, or any of the above!
It’s different for everyone
Keep in mind that investment isn’t a one-size-fits-all pursuit. Just like the majority of money-related challenges, it boils down to where you are and where you need to go financially. This may be just as much of a lifestyle choice as a financial decision.
There are lots of approaches to begin investing with any kind of budget. There are lots of online and program based platforms which makes it easier than ever. All you need to do is get learning and get started. When you do, it is going to get incrementally easier as you gather more experience, and also you will thank yourself later down the road as you become more financially stable. If you have any questions about my website or article, feel free to head to my contact page and drop me a line!