Many people think it's not possible to get started investing because they don't have enough cash. With today's digitization, access to the internet, and financial tech or FinTech companies it has become much easier to invest.
It has been proven that the earlier you begin investing the better off you'll be in the long term.
The video below will provide great insight on How Much You Should Start Start Investing With and how to free up additional cash to get there.
For Stocks
There are financial app's that let you invest as little as $5 and for some you get a bonus stock! These platforms are web and app based such as:
Acorns
Stash
CashApp
Robinhood
Fidelity Spire
For Cryptos
Coinbase
Kraken
Gemini
Binance
Paypal
Be careful however, and we advise that you read the fine print and compare when signing up with Crypto Exchanges to purchase cryto-currencies. Crypto currencies are not heavily regulated by the IRS or the SEC at the time of this writing. A nice feature if you want to engage in the risk of cryptocurrency is that you can earn crypto coins through the Coinbase platform, as you learn about the crytocurrency you are rewarded, how awesome is that!
For your cryptocurrency portfolio allocation we recommend:
Before Investing
Before you start investing you'll want to ensure you have a Budget and goals tied to the budget in order to create your Rainy Day and Emergency Savings Fund. For budgeting and savings assistance go to our Budget & Savings Courses.
Rainy Day Fund
A rainy day fund should be $500 - $1000 to have for a gift, short vacation, or flat tire.
If you own a new or used vechicle some unexpected expenses could occur such as a flat tire, transmission/engine issue, or even an accident. Your rainy day fund may be able to take care of this depending on the expense, but you can supplement the expense with your Emergency Savings Fund.
Emergency Savings Fund
Your Emergency Savings Fund should be about 3-6 months living expenses. Anything greater than that is a plus. The reasoning is that it could take you 3-6 months to find a job.
Benefits:
If you are unemployed you an use your Emergency Savings Fund as a supplement to unemployment.
If you've been watching the news lately there have been fires, floods, tornadoes and abnormal weather. If you are a homeowner you'll want this fund setup for any unexpected expenses that may occur. In addition there are major costs for example if a furnace, air conditioner, roof, or gutters require replacing.
If you've been watching the news lately there have been fires, floods, tornadoes and abnormal weather. If you are a homeowner you'll want this fund setup for any unexpected expenses that may occur. In addition there are major costs for example if a furnace, air conditioner, roof, /or gutters require replacing.
Now You Are Ready To Invest
Fantastic, you've got your Rainy Day and Emergency Savings set!
Investing is the best way to make your money work for you, prepare for short and long term goals as well as retirement. You'll have to decide if the market excites you, or if you just want to set and forget it. If the market excites you Day Trading or Swing Trading may be fore you. You'll want to know about Fundamental and Technical Analysis, here is a brief video.
However, if you are a Long Term, "Set it and Forget It" Investor, Index Funds which follow the major indexes, Exchange Traded Funds or ETF's are a basket of stocks with a particular theme or index related themes. A cool thing about ETF's is that some give you double and/or triple volatility. So if you have an ETF betting with the market if the market moves 1%, you'll receive 2% or 3% on your investment. That sounds great right! Well be careful, because if the market moves against you 1%, your investment will also move against you 2% or 3%. This also works inversely, meaning you can bet with a falling market if the market is in a confirmed downtrend.
Most ETF's follow sectors such as Financial, Artifical Intelligence, Space, Robotics, Energy etc. There are other ETF's that invest in themes such as Social and Corporate Responsibility, Equity and Inclusion, or Environmental Susatainability. Many indidivuals like Thematic investing becuase they aren't just investing, now they are investing with purpose. For more information check out this infographic from Fidelity.
Mutual Funds are also an option, however you'll want to watch the returns and fees on mutual funds. Below is a quick comparison:
ETF
Benefits: Low Investment Minimums
More hands on control over the price
If you are looking for an Index Fund
Mutual Fund
Repeat transactions automatically
There is a Minimum Investment usually starting between $1000 and $3000
No price control - Regardless of what time of day you place your order, you'll get the same price as everyone else who bought and sold that day. That price isn't calculated until after the trading day is over.
Conservative Investing
If you are looking for more conservative ways to invest your money, maybe you have a shorter time frame there are Treasury Inflation Protected Securities or TIPs. Find out more information here. There are also CD's which you can get through your local bank and Bonds.
All of these investments will have a below stock market rate of return because the stock market is more risky it provides investors with a higher return on invested funds if the companies invested in do well. CD's and Bonds on the other hand have set return rates, are less risky, equalling a smaller return on your investment. This article does not touch on junk bonds which are a riskier asset class.
We hope you feel a bit more informed on the direction you wish to take to start making your money work for you!
Additional Resources:
Get Started With Investing Video #2
Summary
Investing in stocks and real estate has been proven to build wealth for families and generations. It is also beneficial to prepare for emergencies, meet life goals such as buying a home, marriage, and/or saving for retirement. This is a great way to purchase assets and let your money work for you. For more information on How to Invest while aligning your life goals check out our Why Invest course presentation.