You pay your bills on time every month. You have a pretty sizable savings account. You feel like you’re killing it at your career. What’s next?
If the words above describe you and you haven’t started making financial investments, it is time! Making the right investments will allow you to earn interest on your hard-earned cash. Otherwise, your money is just sitting in an account somewhere and stagnating.
Ideally, the right investments mean taking your money and making it grow. You want your assets to work for you, whether they are stocks, bonds, mutual funds, options, futures, precious metals, real estate, a small business or a combination of assets.
It can be tough to know where to start, though. Here is your beginner’s guide to investments.
Always have an emergency savings account handy before you begin investing. I suggest saving enough to pay 3-6 months of bills just in case.
A Vital Necessity
When it comes to investments, no investment is more important than preparing for your retirement. While in your 20s and 30s, if possible maximize a Roth IRA and a company match at work whether 401k, IRA, 403B, etc. If you are unable to do both, your company plan is still a great start. I would aim put 15-20% of your income towards retirement.
For beginners I suggest index funds like ETFs with Vanguard in your retirement plan or separate funds. An ETF stands for “exchange traded fund.” Basically, just like a stock, it is traded on stock exchanges. But unlike a stock, which focuses on one company, an ETF tracks an index, a commodity, bonds, or a basket of securities. They are low cost and tax efficient, making them a good first investment.
If you have a small budget or want to try your hands in simple investing, I suggest using apps like Robinhood or Stockpile to help you keep track of stocks. Both apps are free to use and super helpful.
And as soon as you can afford to, start with an investment property. As long as you don't put yourself in debt on top of your student loan and credit card debt. Investment property is real estate property that has been purchased with the intention of earning a return on the investment, either through rental income, the future resale of the property or both.
And no, your investment property does not have to be in the same state that you are in. It can be out of state.
Keep Up with Financial News
In a world where things are constantly changing, if you aren’t keeping up with the latest financial news, you are being left behind!
As a financially savvy woman, I highly recommend following Investopedia, Forbes, and Bloomberg Businessweek for reading up on the latest financial news. Even though it's my area of expertise, I still educate myself through multiple sources. I keep up with these resources, read books, and listen to podcasts.