It’s never too late to start investing. And with today’s online discount brokerage options, you don’t need thousands of dollars to get started. You can actually invest with as little as $5 using some app-based brokerage platforms and start down the road to achieve your financial goals. Here are five tips to help you get started.
Establish an Emergency Savings Account
Make sure you have some cash aside for common emergencies when you begin investing. Relying on your investment portfolio for relatively common but sudden expenses like emergency car repairs is a bad idea because it will take time to access your money — time you may not have. You’ll also lose out on potential gains, and if you withdraw your funds from a retirement account, you may have to pay penalties to the IRS.
Set Clear Investment Goals
Don’t let that hot stock tip you saw online guide your investment purchases. Instead, look at your finances, your personal and professional goals, and your budget. Then write down some short-term, mid-term, and long-term investment goals for yourself and your family. Use these goals to inform:
- The types of assets (such as stocks, bonds, and mutual funds) in which you invest
- The percentage of each asset type you own
- The specific assets you purchase
Learn About Investing
There’s a wealth of information online about investing that can help you understand what you’re doing. There are also Meetup groups and other similar opportunities for beginning investors out there. You don’t need to have mastered every facet of investing before making your first purchase, but do read up a bit on the basics, don’t be afraid to ask questions, and keep learning more over time.
Make It Automatic
Take advantage of automatic investment plans that allocate a certain amount of money from each paycheck and invest it for you. If you’re investing each month manually, it’s relatively easy to let a sudden daily expense (or even a new pair of shoes) knock you off course. Setting up an automatic investment plan will help you keep saving enough to meet your goals.
Diversify Your Portfolio
Avoid investing all of your money in one or two assets. Investing in several assets and in more than one type of asset can help mitigate your risk of loss. You can diversify your portfolio by asset type, industry, and geography, among other ways.
While investing may seem daunting, there are plenty of resources out there for every beginner. You, too, can achieve your financial goals — be they saving for a home, paying for your child’s tuition, or saving for retirement, by investing.