How To Start Investing & Why You Should

So you’re interested in moving up to the next level, huh? Welcome to the first stage; Investing.

The idea of investing not only your time but your hard-earned money is often not as simple as many may think. Most people are scared to part with their money unless they can receive equal or greater value for it. For instance, if I give you $5 for a slice of pizza, I expect it to be pretty damn good.

This may cause me to shop around before selecting your particular pizza shop. But, what if I’m hungry and I really want pizza and I’m already in your shop?

Luckily for us, there are many great slices in the world of investments, but just like pizza, it will take some trial and error to find the right ones. Let’s try to get a head start on the process, shall we?

Startup

As I read through various articles I wondered how I would start this. This excerpt from a CNN Money article titled,  I’m 23. How do I start investing? provides what I think is the first step to investing any of your money.

“First, build an emergency fund that can cover three to six months’ worth of expenses. This is your lifeline if you lose (or quit) your job, or an unexpected health scare brings on a ton of medical bills. You want to have this cash on hand for when you need it and not have to worry about losing some when the market falls.”

The article goes on to suggest that you should try to pay off high-interest credit cards or any other monthly debt expenses. This is also great advice. Think about it.

If you know you can survive while paying a certain amount of debt off each month, what if that debt was no longer there? That’s right. If you’re following along, you’ve already determined that you could use that money to invest instead of making your creditors richer.

Even though I love the idea of trying to pay off debt before investing, this strategy also provides a catch-22. What about those who are investing so that they can get the money to pay off their debts?

Step number one here may take longer than they’d like and you know how I love to preach about how time is more valuable than money. We need something we can do now!

The ‘cookie jar’ approach seems like a great alternative to trying to get a whole six months worth of livable funds tucked away. In the Money Under 30 article, 5 Easy Ways To Start Investing With Little Money, Kevin Mercadante recommends saving a few bucks a week until you have enough to invest.

I like it, but this time period of $500 in one year is still too long. I ‘d suggest taking a page out of Rich Dad Poor Dad and pay yourself before you pay anyone else. This will get you to that $500 or more faster. Then you can start making moves.

Stock Up

After going through a few articles on stock investing I decided to lay off the promotion of this type of investment for someone just beginning. Kind of.

In the Investopedia article, Start Investing With Only $1,000, they break down some nice information about how easy and affordable it is to buy and sell stocks on your own, but through personal experience, I have learned that’s a game you only play if you can get a large number of shares in a company you know is on the rise. The latter is not a guarantee, but there may be a way to bawl all of this up into one single, time, money-saving, money-making machine.

There’s an App For That

This is the computer age, so it’s logical to assume that there’s an app that will do all of this stuff for you right? Well, yes and no. In the Forbes article, How To Invest With Just $5 investor and entrepreneur Zack Friedman, runs down an app named ‘Stash’  that will do just that for you. To be clear I know nothing about this app, but I do plan to look into it because from what I read so far it seems intriguing.

The app is similar to ‘micro-investing’ apps such as Acorn and Robin Hood. What I like about this particular app is the fact that they look to educate novice investors in addition to offering affordable and easy ways to invest. Here’s an excerpt from an interview with Stash Founders Brandon Krieg and co-founder Ed Robinson

“In addition to helping you invest in the companies and sectors that mater most to you and match your interests and beliefs, the mobile app also explains finance and investing concepts in simple terms to help educate users about how to invest.”

As mentioned above there are alternatives to this app. The big names seem to be Acorn and Robin Hood. There’s some more information about them here.

I’ve actually heard about these two years ago and have a friend who uses one or both of them. I haven’t got into specifics, but as far as I know, he’s happy with them.

Third-Party information will always reign supreme. Why? Because any information from the seller has to be taken with a grain of salt, right?

The seller could be getting paid from Website X to send you their articles. But, information from third-party provides unbiased information which gains trust. At the end of the day, trust is the key cog in any investment advice, recommendation, service, or opportunity.

Invest In Yourself

If I had one tip or piece of advice I could lay upon you it would be to “listen’. Listen to people who have successfully done what you want to do. If you can talk to them face to face do so, if you can not, read their book or blog, listen to their podcast or check out their YouTube videos. Do whatever you can to get as much information as you can.

After extensive research and real-world interactions with successful entrepreneurs and investors, I can personally vouch for this advice. When you put everything together with some hard work and dedication the result will not only be a great slice but maybe even a few pies.

I will leave you with some investment tips from Financial Advisor’s courtesy of Forbes and Jeff Rose’s article, How To Invest In Your 20’s: Financial Advisors Share Their Best Tips.

8 Smart Investing Tips

  1. Unleash the power of compound interest by investing early.
  2. Consider investing as part of a broader financial plan.
  3. Consider investing as part of a broader financial plan.
  4. Ramp up your savings as you age.
  5. Ignore all the Joneses in your life.
  6. Invest in yourself.
  7. Automate your investments, then learn to live on less.
  8. Let Your Employer Help

Now you most likely know how to start investing and why you should. Let me know if this information helped you. Leave a reply in the comment box below.

Subscribe to Blog via Email

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: