Easy Tips to Start Investing Tomorrow
Most people know that they should invest their money. Over time, well thought out investments can out-perform most simple savings accounts. But the idea of actually starting an investment can be paralyzing.
What should you invest in?
How much money should you invest?
Where do you even start?
First things first – do you have a broker?
A broker is a person or institution which facilitates the sale and purchase of investment vehicles such as equities (stock) or mutual funds. Now, if you’re just starting out, you’re probably not going to get much interest from the big investment firms. Instead, consider using a simple online discount brokerage. The fees are generally smaller and the initial monetary commitment that is required is lower.
After you’ve set yourself up with a broker, you need to transfer money into the brokerage. How much you start with is entirely up to you – but remember, many brokerages will have a minimum amount that is required to open an account. When you first start investing, it’s often easiest to begin with the minimum amount and contribute more as you grow more comfortable.
Next comes the tough part – what do you invest in?
When you’re first starting to invest, there are generally two options that people consider: equities or funds. Equities generally refer to the purchase of stock while funds, such as mutual funds or ETFs, refer to collections of investment vehicles, some of which may be equities. While the choice is yours and you should certainly research it further, most people often find it easiest to start investing in mutual funds or ETFs because it gives them exposure to many companies at once, rather than taking a risk on a single stock pick.
Then – just get started and make a purchase! While some people might feel tempted to wait for the “best” price, in reality, no one can predict what the economy will do with 100 percent accuracy. You might not get the best price, the stock might go down, and it might go up – but as long as you intend on holding it for the long term, you’ll be able to weather the storm. In fact, many people find it advantageous to contribute regularly to their investments. Over the course of a year, this “averages” your purchase cost – at times you’ll pay the best price and at times you’ll pay the worst, but on average, you pay something in the middle.
Finally, always remember that a simple savings account is an investment as well.
It’s a very conservative investment and it won’t make you a huge amount of money, but if you are uncertain of how to proceed, it’s never a bad idea to simply stash that money away in a savings account.