5 Easy Investment Tips for Beginners
To invest, or not to invest? Chances are, you’ve probably already dabbled in investing at some point or another. From investment apps to work-provided 401k plans, there are so many ways to set money aside and watch it grow. But if you’re hesitant about where to start, how much to contribute, or an ideal investment path that meets your current financial goals, there’s no need to fear. Check out the following investment tips for beginners.
Investment Tip for Beginners #1
First Things First: Are You Investing for the Long or Short Term?
The term “investing” gets thrown around pretty frequently nowadays, but there’s a big difference between investing in a big-ticket item, the stock market, or your 401k.
Before researching the best stocks or mutual funds to snag while they’re hot, ask yourself why you want to invest in the first place. What are your financial goals and in what time period do you hope to achieve them?
While it’s never too early to start investing in retirement, your ideal cash-out date is probably farther down the road than a goal with a less flexible deadline – such as additional schooling you hope to pay for in a few years.
Investment Tip for Beginners #2
Reflect on Your Finances and Decide What You Can Invest
If a mortgage and hefty credit card bills are at the forefront of your financial brain, then you might not have much wiggle room for investing in many extras. Unless you’ve recently hit the lotto (wouldn’t that be nice), it’s highly unlikely that you’ve got a huge chunk of change lying around to invest.
If you want to invest a little bit along the way, look into an investment app to help you manage your money and even invest for you. Fan favorites like Acorns allow users to link their credit or debit cards and then round up everyday purchases. The app then dedicates the change to your very own investment portfolio.
Pro Tip: Take into consideration all of those small purchases that you make weekly that you could cut back on. The biggest mistake made by new investors is thinking that they have to bring a large sum of money to the table before they can get started.
Investment Tip for Beginners #3
Weigh the Risks and Benefits of Investing
Investing, whether long term or short term requires forward thinking. Additionally, investors have different risk tolerances. Determining the investment products that are best for your situation depends on a number of factors, including goals, age, risk tolerance, and your current investment portfolio.
With all of these things in mind, it can be difficult to determine where to begin. A financial advisor can help you weigh the risks and benefits while guiding you to the right products specific to you and your situation.
Investment Tip for Beginners #4
Step Up Your 401k Game
One of the biggest benefits of a 401k account from a job is that most employers will match contributions. In other words… free money! While a small dent in your monthly pay may feel like a drag in the short term, it’s so important to invest as much as you can so that your retirement plan can grow over time.
If your workplace doesn’t offer 401k benefits, or you just want to invest in your own portfolio on the side, consider looking into a Traditional or Roth IRA fund with 1st Ed. You can withdraw from a Traditional IRA at the age of 59.5 and from a Roth IRA anytime. With either option, you can begin investing for any reason – not just retirement!
Investment Tip for Beginners #5
Have a Well-Diversified Portfolio
It is important to have a well-diversified investment portfolio to create the most out of your future financing strategy. This includes being open to ideas you may not have thought about. For instance, many investors don’t know that some whole life insurance products grow cash value – making it a great strategy for investing.
Additionally, there are two types of annuity growth rates – Fixed Rate and Variable Rate. While investors may prefer one over the other, a financial advisor may guide you to invest in both for your situation.
Pro Tip: Use a Robo Advisor to find a brokerage for investing in stocks based on your needs and goals.
Choose the Right Path for Investing
If opening and managing your own stock portfolio sounds daunting, you’re not alone. While this do-it-yourself process may feel less expensive than the cost of a financial advisor, it requires that you pay special attention to the stock market regularly.
Whether you’ve weighed your options and are ready to start planning your financial future or still need some help, we’re here for you! 1st Ed is here to help, call or make an appointment with a Financial Services Representative to get started today! We’re excited to help you on your journey.