Safe ways to get started investing for beginners
The ups and downs of investing have been crazy the past few years. With the rise and fall of certain companies, you could have done really well if you got in on some of the actions. For example, stocks like GME (GameStop) went from $3-ish in 2020 to nearly $500 per share when loyal customers decided they didn’t want the company to go down and started buying up stock. This was amazing for investors because if you had invested $300 in GME in 2020, your stock would have been worth $50,000 at the beginning of 2021. You may have heard of the Missouri dad that invested and made a million after Reddit users bought up the game stop stock to raise prices.
Even this 10-year-old boy made $3000 from his Game Stop investment. Let’s face it… If a 10-year-old can start investing, so can you.
This story caught the attention of many. In fact, the amount of new investors is unprecedented and it’s time you considered jumping aboard the train soon. However, stocks like GME and day trading are often volatile so learning the best ways to invest is essential to your stock market success.
I started investing when I was 24 and have made quite a bit in “safe funds” yet, back then my only option was to hire a financial planner, some of my money is still tied up and I am working on rolling it over so I can manage things myself and lose the fees. Yet, it was fine to get started.
Did you know you have WAY more options than I did back in 2001 when I initially started investing? The best part is these ways to invest are safe and you can DIY your investing if you are comfortable and do a little research.
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5 Safe Ways to Get Started Investing for Beginners
If you want to retire one day, it is best to start growing your nest egg. However, investing and buying stocks can be confusing if you are new. I’m sure you have heard horror stories about ordinary folks like yourself losing everything, right?
Yet, setting up a conservative, diverse investment portfolio will help ease your mind as there is little risk. If you are worried about “losing it all” you can set up a conservative approach, even if you don’t have thousands to invest right now.
401K or IRA
I actually have both. I started my 403b which is like a 401k, but I worked for the state so the type of account is different. Yet, if you check with your HR department, you can set this up and have money taken from your check before taxes. These are accounts meant for long-term investing and they are tax-sheltered, so in short, you minimize tax liability.
If you have an employer that will match your contributions, you are super lucky as this is less common in today’s world. If your employer matches your contributions, make sure to take advantage of this as soon as you can. It will be definitely worth it in th belong run, even if you feel you can’t afford it now. Even if you have to side-hustle for a while, take advantage of this essentially “free” money.
You can set up your own ROTH IRA if your employer does not offer a retirement plan. Use companies such as Fidelity or any online platform, to set up an account and make contributions.
With a ROTH IRA, your money is put in after taxes, so the good news is you won’t pay taxes when you withdraw your money. Although it is post-tax, it is better than not having a retirement account and not making interest on your money.
Fundrise
Have you heard of Fundrise? It is a real estate investment trust. Although in real estate, sometimes the market is up and other times it is down, if you get in at the right times, you can make a profit. The best part is you can start with as little as $500 as an initial investment.
Pros:
Fundraise is easy to use and you can also choose an investing goal for your long-term strategy. Then you will see how much you need to invest to reach your goal. Fundraise will keep track of this goal for you and let you know if you are staying on track.
You can also earn money through Fundraise by referring to friends and family. This can help offset the cost of the investment advisory fees – which by the way, are minimal. In fact, you will earn 90 days of investing without advisory fees for each friend you refer. Your friends will also benefit by having their fees waived too.
You can set your account to reinvest automatically, which is what I do with most of my retirement accounts. Thsi will help you take advantage of compound interest and watch your money grow.
One way to make sure you are investing is to make it automatic. You can set it up so you are investing a set amount from your bank account each month and this will help you reach your goal and keep you from forgetting to invest. Treat your investment as you would an emergency fund and try not to have the mentality that you “can’t afford it”. If you want to retire one day, you must make investing a priority.
Even if you are limited as to what you can invest, some is better than nothing. Even if you can side hustle to invest $100 per month, it is better than not investing at all. It will add up over time and you will see the rewards of your hard work.
Acorns
Another easy-to-use app is Acorns. YOu may have seen this popular app on television commercials lately.
It is a great, safe way to start investing with just a little money. The fees are also low and it is easy to use.
You can set up your acorns account to round up your spare change from credit card purchases, or just put money in your account. It is up to you.
You can read more about using Acorns here and see if this easy-to-use platform is right for you.
M1 Finance
This is also an easy-to-use investment tool that you can set up yourself. It is user-friendly and holds no account minimum and offers a 1-year free trial.
Everything you need to know about investing with M1 Finance can be found here.
Robinhood & Stash
Two more extremely popular investment tools are Robinhood and Stash. Both are user-friendly and hold no account minimums.
Everything you need to know about investing with Robinhood can be found here:
Likewise, everything you need to know about investing with Stash can be found here:
However, it pays to do some research before dumping all of your money into one stock. You can find tons of investment information on Nerdwallet or Stash.com. Look for fractional shares where you are only investing a little bit at a time or Exchange Trade Funds (ETF’s) if you are able to invest a little more. You can also look into dividend stocks such as AT&T. Many dividend stocks don’t pay a high amount, but it can add up over five or ten years.
If you are under the impression you are too old to start investing and won’t make a lot of money, think again. You can see large returns on investments in a year or two. However, the safest way to invest is long-term conservative investments. It is true, if you are younger you can afford to take more risks; but if you are planning for retirement, it pays to be conservative. Day trading and single stocks can reap higher rewards but are definitely riskier.
Getting Started With Investing
Always remember to keep your portfolio diversified. You can diversify by using the methods we talked about today. Fundraise does a solid job of letting you know exactly where your money is invested when your portfolio acquires more projects, and what your projected earnings will be over time. Investing in apps like Stash will even show you how diverse your portfolio is, at a glance, right in the app.
If you are struggling to figure out which stocks to invest in, you can watch YouTubers like Chris Sain, to learn their process of finding winning stocks. Learning more about stocks and investing is going to pay off better than following a “hunch” from a friend. Understanding why stocks perform the way they do, learning how to watch trends, and investing conservatively is how I have built my portfolio.
Well, what are you waiting for? The sooner you get started, the better off you’ll be!
All information on this blog is for education purposes only. I am not a financial advisor.
