Beginning Your Investment Journey: Making Smarter Financial Decisions with Minimal Capital
INVESTING MADE EASY
Getting Started Even With Just a Little Money
If you think investing is too complex or daunting, especially if you’re new to it, think again! The truth is, investing is easier than you might think – and you don’t have to be a millionaire to get started. In this guide, we’ll explore how to start investing, what to keep in mind, and the importance of starting as early as you can.
FRUITS OF EARLY INVESTMENTS
When you’re young, retirement or other long-term financial goals might seem a world away. However, it’s actually the perfect time to start investing. The earlier you start, the more time your money has to grow and compound. To illustrate this, let’s use John and Sarah as examples.
– John begins investing $500 per month at 40, with a 7% annual return until he’s 65. After 25 years, John’s contributed $150,000 and his portfolio’s worth $405,035.
– Sarah, on the other hand, begins $500 per month at age 30 and also sees a 7% return. By 65, she’s contributed $210,000 but her portfolio is worth $900,527 because she’s given her investments an extra ten years to grow.
Even if Sarah stopped investing at 55, she’d still have roughly twice as much as John by 65. The early bird gets the worm – or in this case, the early investor gets the higher returns!
CHOOSING YOUR INVESTMENTS
If you’re ready to dive into investing, the next step is to look at your available options. Here are a few simple ones to consider:
1. Stocks: Stocks allow you to own a small piece of a company. Despite the ups and downs, the stock market has historically provided significant growth over the long term. Nowadays, buying stocks is as easy as using an online brokerage like Public.com or Webull, allowing you to invest without hefty fees.
2. ETFs (Exchange-Traded Funds): If buying individual companies seems overwhelming, consider ETFs. These investment vehicles let you invest in a broad array of companies simultaneously, providing built-in diversification.
3. Robo Advisors: These are automated platforms that choose investments based on your financial goals and risk tolerance. They handle all the grunt work for you, making them an easy and often less costly alternative to traditional finance advisors.
4. Real Estate: Real estate investments can range from owning actual property to investing in real estate investment platforms like Fundrise or Groundfloor. These platforms simplify the process, allowing you to benefit from real estate returns without needing to become a landlord.
BIG PICTURE: YOUR INVESTMENT GOALS AND RISKS
Your investment strategy should align with your personal financial goals – are you saving for a house or retirement? Longer-term investments allow your money more time to grow and weather short-term market drops, while shorter-term ones are more accessible when you need them.
ACTIVE OR PASSIVE INVESTMENT?
Lastly, ask yourself – how involved do you want to be in the investing process?
Active investing involves regularly monitoring and adjusting your portfolio, while passive investing typically involves a ‘set and forget’ approach. Both have their upsides and downsides. Active investing may potentially earn higher returns, but requires more time and knowledge. Passive investing is easier and takes less of your time, but the returns might not be as high.
Once you’ve figured out your investment style, take the plunge! Open an investment account with a platform suitable for your needs. Whether it’s Public.com, Webull, M1 Finance, Titan, Fundrise, or Groundfloor, each platform offers its own unique benefits.
Lastly, remember the money mantra: it’s not about how much you invest but how regularly! Adding to your investments methodically can significantly impact your outcome, regardless of whether you’re investing small or large amounts.
