Why Start Investing or even start saving? Be glad you asked and it is good you are asking. Explained, investing is simply storing up so some day you might not need to work. Investing, may also allow you to live a better lifestyle. Saving and investing over a long period of time may also afford you a nice retirement someday. We would hope sooner than later. Likewise, learning and starting to save and invest is a key turning point in life. Make a decision to start investing it is a mindset change. Are you ready? Let’s get started now!
What are some advantages to Investing?
- When done correctly your investments can begin to feed themselves – you won’t even need to save to grow your savings.
- Learning to invest is a rewarding skill and can be profitable.
- When you start saving it signals the end to a month-to-month type financial existence.
- Investments can grow over long periods of time and provide you with a much greater lifestyle.
What should you start investing in?
Some of the most common investment and saving vehicles:
Owning stock in a company is literally becoming a part-owner. What could be better than owning strong companies like Microsoft or Tesla where thousands of people wake up each morning and go to work for you! You own part of the company and will share in the company’s future. Therefore, you might own companies such as At&T and J&J who even distribute some profits from the company and pay them out to stock holders in the form of dividends. You can then easily reinvest those dividends back into buying more shares. These arrangements are known as DRIPs. DRIP stands for Dividend Reinstatement Program. DRIPS are established through the company’s own program or set-up through your brokerage house
Start Investing in Stock Funds and ETF’s
In the past people would buy shares in Mutual Funds. Now they buy shares in Electronically Traded Funds (ETF.s). Mutual funds where investment funds holding stocks, bonds or other investment. Generally, most were managed by large investment houses. People could start investing in a big or small way and Mutual Funds worked very well for many people. Unfortunately, the downside to Mutual funds was transparency about holdings and fees. Now, fast forward to today, ETF’s have become far more popular. So, like Mutual Funds, ETF’s help you diversify, let you start saving small amounts and you can pick sectors of the stock market that you like. Thus, unlike Mutual Funds, ETF’s carry little to no fees and you can see exactly what stocks are being held at any time.
Either through Index Funds or even directly individuals can invest in Bonds. Generally Bonds are debt obligations and originate from many sources. Most Issuers/guarantors of Bonds are governments, corporations and even people in the case of mortgage backed securities. Bonds and bond funds can be rated and some are unrated. Bond yelds or rates of return can vary based on maturity, term and rating.
Real Estate Investments
You can start investing in Real Estate in a number of ways. Direct property ownership is very common and your home and investment properties are widely held Real Estate investments. You can purchase many Index Funds that target various types of Real Estate investments. Common are funds focused on Commercial Properties, Apartment Building, Retail Shopping and others. Becoming very popular now are more crowd funded types of investments such as Fundrise and Crowd Street to name a couple.
Ready to Start Investing?
- Start Saving, continually adding new money to your investments smooths out you costs and builds your foundation.
- Start Investing automatically through your company’s 401K plan (First choice) or to a brokerage account.
- Get your budget in order to free up some cash each month – See our article on starting a budget.
- Keep track of your progress – See our article on Tracking Your Net Worth.
- Open an Account – our review of M1 Financial and our review of Stash Investments.
- Get some advice – we are great fans – See our Review of The Motley Fool.
The most common mistakes people make when they start investing?
They don’t start. Even a small monthly contribution especially early in life can lead to sizable savings. Get started today!