Start NowThe best time to start investing was yesterday. Those who invest a little early are better off than those who invest a lot, later.
Start SmallYou don’t need thousands of dollars to start investing. Start small through apps or a credit union.
No TouchyThe stock market goes up and down all. the. time. Don’t panic and pull your money every time it dips.
Okay, look, we get it. The word “investing” is either scary or boring or both. It’s very easy to think investing is for capital-A Adults who have money to spare. They talk about stocks and the market and a bunch of numbers you don’t understand, and now you feel like you’ll never know how to start investing.
Here’s the thing, though: investing is way simpler than that. And we can help.
Investing is simply a way of setting aside money and watching it grow.
If you have a savings account, you’re already halfway there. And that next step — investing — allows your money to work for you. It doesn’t have to be tens of thousands of dollars; it could even be an extra $10, $20, or $50 dollars every week.
In this post, we’ll talk about how to start investing, how much you should invest and some basic tips.
When Should I Invest?
First of all, you’re probably wondering when you should get started. The short answer: yesterday!
But before you do anything else, you need to start forming the habit of saving and putting aside your money. This doesn’t mean you need to budget a huge chunk of your paycheck for investing; it simply means being a little more intentional with your saving.
When you’re stopping for coffee, maybe get the small (or tall, or whatever; the cheap one).
When you’re at the grocery store, spend $10 less.
Or just turn off those in-app purchases if you’re often tempted to make a few 99-cent purchases a month. Whatever works for you.
Soon, you’ve got an extra $20–$40 dollars a month, which doesn’t feel like much, but it all adds up.
And that’s the idea. Once you’re ready to be more intentional with your money, you should calculate how much you’ll need to retire. It doesn’t matter if you’re 24 or 64 — retirement should always be a part of your financial future!
Research Investment Accounts
Once you’ve figured out how much you’ll need to retire and live comfortably, it’s time to get saving. But before you can do that, you need to do some research. There are all kinds of ways to invest, and it’s important to know the details before getting started.
For example, there are online brokers which give you full brokerage services. This means they give you not just investment advice but financial advice for retirement, healthcare and other money-related aspects of being a human being.
Unfortunately these are typically for clients with a higher net worth than most Gen Zers and Millennials are.
But luckily, there’s another solution!
1. Credit Union Investment Accounts
Another option for investing is to do so through your trusted credit union. A federally-insured credit union is just as safe as an FDIC-insured bank, and they’re open to almost everyone (even those of us drowning in student debt).
An investment account is like a savings account, only the money isn’t just sitting there waiting for you to add to it; it’s basically alive. So if you’re wondering how to start investing, this is a good place to begin.
2. Savings Accounts and Apps
Not quite emotionally prepared for an investment account? That doesn’t mean you have to wait to start investing. Instead, link your credit union savings or checking account to an app like StockSquirrel or Acorns. These apps help you invest little bits at a time just by shopping at the places you already shop!
With apps and real-human investors, you have the ability to choose how aggressively you invest. A more aggressive approach is riskier, but it also increases your potential reward.
From there, investing is often a waiting game. The market goes up and down multiple times as year, but as long as you leave your money alone, you’ll ultimately earn money, even if you experience a couple recessions in your lifetime.
Types of Investing
Next up is to learn about the various types of investment options. As mentioned, you can choose to be more or less aggressive with your investments. But you can also invest in different ways: mutual funds, stocks, bonds, as well as IRAs — both traditional and Roth. That might seem like a lot, and it is, but it’s also not once you get the hang of it.
1. Mutual Funds
Okay, stay with us. Mutual funds are investment securities that allow you to invest in a portfolio of stocks and bonds with only one single transaction. This means mutual funds can often be a great option for beginners, as you don’t have to worry about a bunch of transactions.
However, many mutual fund companies require initial minimum investments of between $500 and $5,000, so if you’re trying to start small, a mutual fund may not be the best route. Unless those amounts are small for you, in which case, congratulations!
Everyone knows about stocks, but not everyone knows what stocks actually are. Stocks are basically another type of security that gives stockholders a share of ownership in a company. This means that as the company grows or shrinks, your money follows its lead.
Stocks are one of the most well-known types of investments, and there are several types which we won’t get into here. The important thing to understand is that stocks are simply pieces of a company that you can “buy.” As that company grows, so does your money.
A bond is a fixed income instrument that represents a loan made by an investor to a borrower.
Think of a bond like an IOU between the lender and the borrower, only in this case, the borrower is the government.
An IRA is an individual retirement account. Within an IRA, you can find all of the above types of investments, such as mutual funds, stocks and bonds.
A Roth IRA is an individual retirement account that offers tax-free growth and tax-free withdrawals in retirement, but there are many rules and regulations before you reach retirement age.
A Traditional Roth IRA is similar, except your contributions are tax deductible the year they were made.
Essentially, the only difference is in how they’re taxed. You can have one or both — but it’s smart to talk to your credit union’s financial advisor to determine which is best for you.
Okay, we get it. This all probably seems like a lot. And it is, but don’t worry. Investing seems complicated at first, but once you start, things will become clearer.
Our biggest tip is this: don’t panic. The stock market is rising and falling all the time, but overall, it’s rising.
So don’t pull out money at the drop of a hat. Our advice? Once you invest money, don’t touch it! For like, decades! You don’t want to “save” money now only to screw over your future self when it comes time to retire.
Our second biggest tip is: diversify!
Our second biggest tip is: diversify! This means you should have investments in all sorts of industries and varieties. That way, if one of your investments doesn’t work out, it’s not the end of the world.
Invest Without Money
This headline is kind of a lie, but what we mean is this: you don’t need to be a millionaire to start investing. You can do so with only a few spare dollars a month, because every little bit helps.
Many employers offer investment through the existing retirement savings plan at your business. If you’re a full-time employee, there’s a good chance you can have them take a small percentage out of your paycheck to invest. These are even taken out before taxes!
Investing with Credit Unions vs. Banks
Is there even a difference between a credit union vs a bank? Of course there is; otherwise they wouldn’t have different names. However, it can be confusing at first to separate the two.
A credit union is a not-for-profit financial institution. This means there’s no one in a conference room trying to profit off your misfortune (or your fortune). Because of this, credit unions typically have lower fees, which is helpful if you’re trying to save money here and there to start investing.
Credit unions also usually offer higher interest on savings and lower interest on loans. All of these features give you more $$$ to invest!
As a bonus, a credit union exists to combat wealth inequality, so they’re very friendly to those learning how to start investing. They want you to grow your wealth and shrink that wealth gap — isn’t that nice?