I love investing – I read magazines about investing and like to watch shows on CNBC. Yes, CNBC gets me excited 🙂 When I am on the treadmill, I am usually watching the latest episode of Suze Orman!
I wasn’t always that way. When we first got married, we were scared of the money my husband was making and just let it all sit in a money market account, even in his 401K. When I had my second child, I realized I need to figure out how this money and investing worked. So I started researching, reading and watching, and I was hooked. I loved planning and working on our savings and investments. It is not as difficult as it seems and anyone can learn to invest wisely, if they take the time to learn. I kick myself that it took me so long to learn about it and get our finances and investing life in order, but I am so glad that I did decide to do it!!
Recently, someone asked me the best way to start investing.. First of all, if you have a 401K (or a ROTH 401K is even better) at work and your work matches your contribution, you had BETTER be putting money in to get that match (up to the match), otherwise you are just THROWING away money! It is like getting a 100% return on your investment (or 50% of they match half) – where can you get that kind of return?? That’s right, nowhere! So if your company matches, put your money there, but only up to the max that they will match.
Second, if you are doing that, or your work does not offer a 401K, open a Roth IRA ASAP! Many companies have minimums, but some don’t or will let you open with automatic investments, so look around to find one with LOW costs and NO hidden fees. A Roth IRA will give you tax free money when you retire. We have both a Roth 401K and Roth IRA’s, so we shall be living our retirement mostly tax free 🙂 (we personally use Fidelity for everything but our 529 college savings accounts and sharebuilder, but there are MANY good companies out there – research and find one that works for your needs). Set up your account to automatically take the money out of your account and invest each month, so you don’t have to think about it, and if you have the money taken out automatically, you won’t spent it – it is liked forcing yourself to save!
Now if you just want to put a little money into investing a month – I would start something like a sharebuilder account. If you don’t have a Roth IRA, you can make this account a Roth IRA and they have NO MINIMUM amounts to invest and no account minimums, so even if you only have $10 or $20 to invest a month, you can still do it! No excuses. Their cost to buy a shares or mutual funds is only $4 – one of the cheapest rates you’ll find (I have one of their plans, so it is even less a month per trade)… They even GIVE you $50 as an account bonus for opening an account.
Then pick a stock (or mutual fund) of a good, reliable company that gives a good dividend. A good dividend pays you for just parking your money in that stock, like the interest you get on a bank account. If the market goes down, you can still get your dividend, while you wait for the stock to rebound. Just think of one of your favorite companies and look at their stock. Pick a good, reliable, long standing company and one with a good Dividend rate -some have as high as 6% – 6% for just letting your money sit in their stock! Sweet! So high dividends are nice. Set your dividends re-invest themselves and let the amount of shares you have in a company grow and grow over the years.
Then just set up your account to invest – at least sharebuilder can do this, I am not sure of other sites – to invest $20 or so a month (or less, No minimums, but you do still pay the $4 to trade, so make that $4 worth it!) into that stock (or mutual fund) – if you are going to do more than 6 stocks, then get one of their plans, but if you are new to investing, stick to ONE stock at first (with a good dividend) and then once you are more comfortable, you can try some more. Or if really uncomfortable with stock picking, just pick a NO LOAD mutual fund or ETF, with LOW fees. Have it set up Automatically each month (forced savings/investing), and you don’t have to even worry about it – really easy 🙂
So there – almost everyone has an extra $10-20 a month – or you can find it – to start investing (make it a Roth IRA if you don’t already have one!!) Remember, you can always remove your principal investment from a Roth IRA at anytime (but you must leave the earnings in until you retire), which can be good in an emergency! Just pick GOOD, RELIABLE companies and go for that dividend!! Now go start investing – it is easy and we aren’t getting any younger, and you NEED to do this for your future!
More to come in my series on investing. Up Next? stock/mutual fund picking!
