Friday, October 9, 2020

How to Get Started Investing

   For many people interested in investing the first step of getting started is the biggest hurdle they face.  According to www.sec.gov only 30% of Americans have investments in taxable brokerage accounts outside of their retirement plane.  I know many people that have savings in traditional banks with traditional bank products such as savings accounts or CDs.  These folks are a little nervous about investing in the stock market or bonds because they fear the unknown.  They don't understand the investment options or they don't know how to begin.  

   Investing in stocks and bonds has been a critical piece of my journey toward becoming a millionaire.  If you wish to reach similar financial goals it will most likely need to be a part of your journey.  

  So, where does one start?  The first piece of advise I would give is don't invest in any product you don't understand.  Before I began investing in mutual funds I purchased Mutual Funds for Dummies.  This book helped me get a basic understanding of stocks, bonds, and mutual funds.  Of course you don't need to read and entire book to get an understanding, but you get the point.

   The next step is to select what you would like to invest in.  This is the part that overwhelms most beginners.  There are so many investment products.  I recommend a balanced mutual fund to beginner investors.  A balanced fund is great because the fund invests in the stock of many companies and also owns bonds.  This provides stability with modest growth.  When you are starting out, you don't want to ride a roller coaster of ups and downs.  You want an investment product that you can put money into routinely and you will see a benefit from investing your money.  Most if not all mutual fund companies offer balanced funds.  I own several Vanguard mutual funds and Fidelity mutual fund products.

  I never recommend investing in individual stocks unless you are a professional or are willing to put 5-8 hours in per day researching companies.  I work for a large corporation and my company's stock price first went down 40% this year only to go up 60% from there.  Talk about a roller coaster.  If you are just starting out riding the investment ride, you don't want to get on the biggest and sometimes most dangerous roller coaster in the park.  

  Now that you understand the investment and have selected a product you want to invest in, the final step is easy.  Simply open an online account with the company who's investment product you selected.  For example, if you liked one of Vanguard's mutual funds you would go to www.vanguard.com and create an account.  Once you have an account, you would select the mutual fund for which you want to purchase shares.  Most Vanguard funds require a $3,000 minimum to invest in the fund.  However, there are some that only require $1,000.  Then use the website to execute the purchase of your mutual fund shares.

  Congratulations!! You are now an investor in a taxable mutual fund!  In the future you will become more familiar and more comfortable with growth oriented and higher risk mutual funds.  Branch out at your own comfort level.       

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The Real Millionaire

 I am a 39-year-old man with an amazing wife and 4 awesome kids.  I am also considered a net-worth millionaire.  Achieving this goal has alw...