Get Started With Investing
2 months ago
I continue to hear that people are confused about how to start investing. Honestly, I don’t understand such bewilderment. If you ask me, investing has never been easier. Maybe before the Internet, but not now. There is so much information out there, no one should be at a loss. However, money mentalities are responsible for this. Everyone has their priorities and if managing their money is not near the top of the list, it gets forgotten. If someone is immersed in their career or other priorities, their money mentality takes a back seat. Totally understandable.
Learning how to invest can be a lifetime endeavor, and a confusing one. With the number of available investments, it can be dizzying to even attempt to understand it all. Dizziness leads to zone-out, and ultimately, non-action.
The key is to start small. Get your feet wet. Buy into something even if it’s just an index fund. Open an account with Vanguard or Charles Schwab. They cater to individual investors and will help you through any of the slightest indecisions. When you get a bit of confidence in investing, you can branch out to a variety of financial instruments or just reach the comfort level of seeing your balance grow.
I believe having an open account will give you a focus. Once the account is created, you should put your deposits on auto-pilot. Setting up an automatic contribution is ideal, but if you don’t, I recommend putting the account’s website in your Favorites list and opening it on a weekly basis.
Another option is using a robo-advisor. There are several choices that offer no-minimum, no-fee accounts. Google “robo advisor” for a list of providers. Open up an account and set it to automatic deposits.
A favorite of mine is a DRIP account. I had a very short conversation with someone that admitted she had no idea how to manage her money. I mentioned investing in dividend reinvestment plans (DRIPs) and she returned a blank stare. However, when I mentioned Disney, her eyes flew wide open. She had no idea that Disney shares could be bought in a DRIP.
I love DRIPs. They’re in alignment with my dollar-cost averaging, incurable saver addiction. I love consistency and, with a DRIP account, it gives your money a separate bucket to be regularly dropped into. Some companies have automatic deposit options.
I have several DRIP accounts. Because I am already invested to the max in my tax-deferred accounts, these DRIP accounts give me an alternate sense of savings. I like seeing the accumulation of shares and the subsequent dividend reinvestments.
Your initial investment varies by stock but can be as low as $250.
Be careful of fees. This website evaluates companies’ DRIPs and provides some background information. http://www.dripadvice.com/
March’s Trivia Question: When was Wall Street started? Wall Street was started on May 17, 1792 as The Buttonwood Agreement.