I’ve been receiving a lot of feedback from my blog post and one of the most consistent requests is to write about how to get started investing. This excites me because it shows that people are beginning to understand that the earlier you start investing the better! The investing world can be very complex and there is a lot of noise in media and on the internet. This makes getting started very difficult and bit scary if we’re being honest. Will I lose all my money? Do I have to be rich to get started? What if I make an unwise decision, will I ever invest again? With all these nerve-racking thoughts and no real guide on how to get started most people simply do nothing. This is not as bad as giving your money to a life insurance agent who says whole life insurance is an “investment” (I’ll save my distaste for misguiding life insurance agents for another post) but doing nothing is bad as well. Investing is the only way to truly build wealth and my goal today is to give you strategies to get started TODAY!
TIP 1: Take Advantage of Your 401k
If you have a company 401k plan this is potentially the easiest way to begin investing. A 401k plan allows you to begin investing with pre-tax money and do it directly from your paycheck. This is one of better ways to begin investing because once you set up the contributions they will continue indefinitely unless you personally stop them. This allows you to automate your investing (one of the best things you can ever do, see more here) and put money away tax deferred. Lastly, your company may even offer a dollar for dollar match, which means they will give you free money just to get started investing!
TIP 2: Open A Roth IRA
So what is a Roth IRA? A Roth IRA is simply a tax-sheltered investment vehicle which allows you to invest today with after-tax dollars and never EVER pay taxes on the gains that you’ve accumulated. This is a very powerful tool that I feel everyone should take advantage of. In order to set up one of these accounts you will need to select a custodian and create an account online. I recommend Vanguard because their people are very helpful, and they have the lowest cost index funds out. Use the link here to start an account.
TIP 3: Download Acorns and Live Your Life
Perhaps one of my favorite investing apps ever is Acorns! Acorns is a mobile app that takes your spare change and invests it for you. For example; if you go to Starbucks and spend $3.14 on a coffee, Acorns will take the $.86 and invest it for you. Yes, I know what you’re thinking, “what is investing $.86 really going to do for me?”. Well I started using Acorns in January of this year and in a 7 month span I’ve manage to accidently save an extra $762.44! I never noticed the small debits being taken from my accounts and invested but over time it grew to a substantial amount.
The 3 tips above are just a few of the many ways to get started investing. My goal is to get you investing today and to simplify all of the noise that’s out there. Investing does not need to be complicated, actually it can be simple. Put these tips to use today and begin your journey to building wealth!