What’s the investment secret? There isn’t really one. Investing takes little time, and doing so pays dividends (literally).
Often we ‘re overloaded with headlines promising to tell us which five hot stocks are the ticket to quick wealth. Or we see it as something “only rich people know how to do it.” Research shows that women, in particular, doubt their savvy investment, and for others, investing is a luxury. Most Americans don’t have tons to throw around.
But there’s no “secret” knowledge you ‘re missing, no fancy strategies you need to learn first. You just got ta start. As I wrote earlier:
To save effectively, start small and make it consistent. You develop the habit and save better over time. How long does it take before second nature? Well, that will, of course, depend on you and your individual circumstances. Live below means, automate money, don’t cut corners. Look, I’m just taping these words, but it works.
You can start with some bucks and a few minutes’ research. That’s easier than reading more, working out, eating healthy, or meeting just about all of your other goals.
Here’s how to do it.
Choose an account
When you’re given a 401(k) account at work , please — you’re already on the way to saving. If not, a brokerage like Fidelity, Vanguard or TD Ameritrade will open an account (either a different type of retirement account, such as a Roth or traditional IRA, or a taxable account, depending on your financial goals).
Online brokers allow you to manage your own investments, or you can use a robotic advisor such as Wealthfront or Betterment to make automated investment decisions. But chances are you won’t have to pay any extra to invest with a robo; the best strategies are simple enough to do them on your own.
Don’t just randomly pick — not all brokers are created equal. A quick Google search for “best robo-advisors” or “best online stock brokers” will help you quickly get land layers. You’ll want the one that best aligns with your goals. Some things to consider: management fees (which should be well below one percent), account minimums, and investment choices.
Use your assets
Once you open your account, choose how to invest your money. Most online brokers have fairly low minimums — if you don’t start with a lot of money, you’ll want to make sure the company you choose is the case.
Your investment goal is to match the market, not beat it (guess what: no one consistently beats the market), because historically the market has risen.
Yes, it’ll be setbacks. But the market generally goes up , meaning your investments will become more valuable over time. Select mutual or index funds low-cost.
These are stock stocks, so you spread the risk of investing; you don’t want to spend all of your money on a single product. If you stick to your 401(k), you may not have access to individual stocks.
You want to pick some of these. And you want to determine how much of your money should be invested in stocks and in “safer” assets like bonds or cash. The younger you are, the more stocks you will have, but ultimately it depends on your risk appetite and financial goals.
For specific examples to choose from, read this article:
You may have noticed I keep using the word “consistent.” That’s because one of the keys to invest is to keep doing it.
Through regularly contributing to a savings or taxable account, you will over time rid market lows and build wealth. “When setting up your account, choose an automatic trading plan to benefit from a dollar-cost average, if possible,” writes Anna Louise-Jackson for Nerdwallet. “This is a strategy to spread investment purchases over time so you don’t invest all your money when prices are high.”
So, once you open your account and make an initial deposit, set up automatic contributions. Treat it like a bill you pay on time. How often you do this, and how much is up to you; try at least monthly, if not weekly.
You’ll want to check your investments regularly, of course. But as long as you have made informed decisions, all your investments should be set for some time. You often don’t need a lot of money to get started.
Originally published in 2019 and updated by Lisa Rowan on June 23, 2020. Checked links for accuracy, updated formatting to reflect current style, changed headline and feature image, revised article to consolidate some content.