There is a lot to learning to invest. We’ve got three not so obvious things to know about investing listed here for you.
Investing can be scary. In fact, the number one reason people don’t invest doesn’t have to do with education, but fear. Almost everyone agrees you should invest. You see “market recaps” on the nightly news before dinner. You know you should be doing it… but you’re not. You’ve saved, scrimped, and built a nice little nest egg, and you know you should be doing more with it.
This fear…it comes from the thought that other people know more; or I might lose my money; or I don’t have time to do the work required; or I don’t know where to start.
But it’s easier than that – and here’s three things that aren’t very obvious, but will help you pave the path to investing success. Investing isn’t a “once and done” thing – it’s a journey, so let’s get started.
Make Investing Painless By Automating It
The best way to force yourself to start investing (while also making it super-easy) is to just automate the process.
For most Americans, you have access to a 401k or 403b through your employer. Take advantage of these plans. You can set it up to automatically take a small percentage of your paycheck and invest it. Plus, many employers offer matching contributions – that’s free money!
If your employer doesn’t offer a 401k, you can still automate your investing. You can setup an investing account to automatically invest a certain amount each week/bi-weekly/month, based on your preference. Some of the more popular options for this include Sharebuilder or Betterment.
The great thing about automating your investing is that you never have to worry about it again, and you have peace of mind that you’re building wealth for your future.
Don’t Pay More Than You Need To
The next not-so-obvious tactic to help you get started investing and overcome your fear is to never pay more than you need to.
Investing has a bad reputation as being a fee-sucking adventure. You have to pay advisors, you have to pay other commissions, you have account fees, and then you have fees on the actual investments you choose.
I’m here to tell you that, for most of you, you don’t need any of that stuff. If you use the services mentioned above (Sharebuilder and Betterment), they are both low cost and low fee options to get started.
If you want to have more control and do a little bit yourself, you can save even more by choosing a discount brokerage like Fidelity, Scottrade, or Acorns.
The important thing to remember here is that fees eat away your profits. The higher fees you pay, the less money you’ll earn. So your goal should always be to find the company with low fees that matches what you’re looking for.
Time Is Your Best Friend
One of my favorite quotes in life is “The best time to plant a tree was 25 years ago. The second best time is today.” The premise is that if you want to have a full-grown tree, you should have planted it a long time ago. But, if you didn’t do that, there is no better time to start than right now.
The same is true for investing. The longer you invest for, the more money you’ll have – it’s pretty simply math. But don’t kick yourself if you didn’t start investing when you were 22 years old. Just get started now.
Millennial have a very unique advantage when it comes to investing – time. If you’re 40 or 50, you can’t go back to your 20s and start again. But millennials have this time on their side, so the more money they invest, the bigger their nest egg will grow as they approach retirement.
What’s Holding You Back?
Now that you know a little bit more about investing, including some less obvious tactics, what’s holding you back? Don’t let fear prevent you from living a rich life. Share your story with me in the comments!
This is a guest post by Robert Farrington, founder of The College Investor. He is America’s Millennial Money Expert, and he helps millennials and young adults build wealth in their 20s.