We get it. Investing can seem daunting, overwhelming, frustrating, discouraging, and even downright confusing.
Here’s the thing though: it is SO important and you CAN do it.
If you want to build wealth and live life on your own terms then you need to begin investing… in yourself, your development, your career, and your financial accounts.
Not sure how to get started? We break down the steps you can take to get started below:
Step #1: Choose where to begin
There are a few different ways to begin investing. You can work with a financial advisor dedicated to serving you personally. You can open an account with a low-touch robo-advisor, such as Betterment or Robinhood. Or, you can choose to open an account on your own and try your own luck at investing. No matter which route you take, be sure you do your research to find a platform or advisor that will work best for your desired goals and investment amount.
Step #2: Open your new client account
Regardless of which route you take, your next step will be to open an account. If you’re working with an advisor, they’ll likely take the reigns in helping you with this. If you choose to open an account online on your own, scroll to the portion of the screen page that allows you to “open a new account”.
Step #3: Fund your new account
Now that your account is open, you’ll need to fund it! The most common way to fund these new investing accounts is to elect to transfer funds electronically from your bank account. You certainly could always roll over funds from a former retirement plan (such as a former 401(k) account), deposit a check, or transfer investments from another source, but most of the time it is easiest simply to elect for the ability for funds to be directly transferred from your bank. This way, you can easily arrange for automatic deposits to be made in the future.
Step #4: Choose the type of investment account
Many times, an advisor or online brokerage will ask you why you’d like to begin investing in the first place. If you’d like to invest for retirement, you can then choose to open either a Roth or Traditional IRA (…IRA stands for Individual Retirement Account). If you’d like to invest for educational purposes (to fund a child’s education, for example), you may be prompted to open a 529 plan or Coverdell Educational Savings Account. Otherwise, if your main goal is to invest for other reasons (i.e. general savings, income, etc.), you may want to open a general advisory or brokerage account.
Step #5: Enter your personal info
Key things to have handy: your full legal name, date of birth, social security info, and banking information (including your bank account number and the bank’s routing number). Not sure where to find that info? Contact your bank for help or look at a check from your checkbook. Usually, your account number is listed on the bottom of the check followed by the routing number.
Step #6: Choose the amount you’d like to invest
You can elect to deposit a lump sump or to sign up for monthly contributions. For certain accounts, such as IRAs, you may only be able to fund a certain amount/year. Be sure to contact your advisor or ask how much you’re permitted to contribute in those cases. Note* you can contribute up to $6,000/year for an IRA.
Step #7: Select your investments
Finally, it is time to invest those contributions! If you’re working with an advisor, they’ll be able to do this with you, but if you would like to do so on your own, be sure to do your research in advance. Choose your investment selections based on your time horizon (how long you have before you need to access the funds), risk tolerance, investment goals, and overall comfort levels.
A general rule of thumb? Subtract your age from “100” and this represents the percentage of your investments that should be in stocks (also called equities). For example, if you are 30 years old, you may want to invest about 70% of your funds in stocks or other assets of a similar risk profile, including mutual funds, index funds, exchange traded funds (ETFs), etc. The remaining 30% of your investment funds might be spread out between bonds, treasury funds, or other investment choices.
If you aren’t quite sure how to invest your funds, consider contacting a financial advisor or a representative from your bank who might be able to assist.
Still want to learn more about investing? Check out our investing online course here: Investing for the Everywoman.
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