For me it started when I was a senior in high school. I was in an economics class learning about what a stock was. The goal was for everyone in the class to pick 10 stocks and see who had the best return. Naturally, I wanted to win. The problem was, I didn’t know anything about stocks. So what I did instead was select stocks that I knew or liked the name of, (a tried and true strategy that most people consider viable today). No real analytics or belief behind it other than I have heard of the names. My favorite was Barclays, which is a bank in England, which I choose because I enjoyed watching the Barclays Premier League (professional English soccer). As the class progressed, I slowly watched as my stocks moved up then down, then down more, until finally, towards the end of the class, I had my overall return. I couldn’t believe my fellow classmates had positive returns, as I ended up losing around 10%, albeit fake money. I felt defeated and unmotivated to take part in any type of investing in the future. It felt like an investing break up. I needed some space from investing.
It wasn’t but four years later when I took an investment course in college, that I became obsessed. My investment professor had broken down the reason for the big collapse in 2008. I couldn’t believe how he knew exactly what happened and how it happened. I wanted to learn these things in order to find success investing. The problem was I didn’t have any money, but I knew I had to start somewhere.
Are you ready to start investing? You keep hearing everyone talk about it and you want a piece of the action right?
Consider the following:
Understand the risk
There is a big risk that comes with investing. The risk that you lose the amount of money you invested. Just think if I had lost 10% of my real money that would hurt. History tells us this can happen, although history also shows us the benefits of investing for a long time period.
The constant question I ask when working with a client, is “what is this money for?” The common response is, “I don’t know I just want to make a better return.” That’s like saying “I just want a car” when someone ask you what type of car do you want? Being specific helps you narrow down the correct investment choice. Each investment carries risk, that can be magnified by timing and if you don’t know when you will need the money you could be choosing the wrong investment.
How to invest
There are numerous ways you can start investing. The most basic is to open up a brokerage account through a company such as TD Ameritrade, Fidelity, or Scottrade. These are brokers that allow you access to a vast array of investments, such as stocks, mutual funds and ETFs. You would open up an account to begin making buys and sells. Then there are other types of investment companies, companies that try and do most everything for you such as select investments. These are companies like Vanguard, Betterment, and Wealthfront.
Another way to invest is through your company 401k or separate ROTH/Traditional IRA. This is how most of us start anyway, but you can open these types of accounts through the above brokerage firms.
The last way to invest to hire a financial advisor. Someone who understands your goals and needs and can match them to a proper investment. Financial advisors generally charge around 1% or less of the assets they manage.
Get started. Don’t wait and don’t let fear hold you back from not moving forward. If you need help, find help. There is plenty of information and plenty of financial advisors that could help you to start investing, including the one who wrote this!
What’s holding you back? Are you ready to start investing?
The Standard & Poor’s (S&P) 500 Index tracks the performance of 500 widely held, large-capitalization US stocks. . All indices are unmanaged and investors cannot actually invest directly into an index. Unlike investments, indices do not incur management fees, charges or expenses. Investments are subject to risk, including the loss of principal. Because investment return and principal value fluctuate, shares may be worth more or less than their original value. Some investments are not suitable for all investors, and there is no guarantee that any investing goal will be met. Past performance is no guarantee of future results. Talk to your financial advisor before making any investing decisions.