Paying off debt is easy, stockpiling an emergency fund is easy, saving up and cash flowing things is easy. You can’t really screw those things up. It takes a while, sure, but if you stick with it: piece of cake!
Investing though? Investing is much more complicated.
Today I’m going to share how I got over the fear of investing, and how you can too.
If you want to dig into investing even more, I’m creating a new course on this very topic. Click here to be added to the waitlist for the course. You’ll be the first to know when it is live and you’ll snag the lowest price!
Risk of Not Investing
Buying stocks can be risky, but keeping all of your money in a money market account or basic savings account can put you at a higher risk of not having enough for a comfortable retirement.
The APY, or annual percentage yield, on a money market or high yield savings accounts is historically lower than what you can achieve through investing your money. While I absolutely recommend stashing money in these various accounts, that doesn’t mean you should ‘throw in the towel’ when it comes to investing.
Investing is a long-term game, and by strategically placing your money into the stock market, you are getting a better return in the long run with all of these interest rates working for you.
When you dive into the world of investing, you will begin to hear terms that you’ve never heard before. You may have heard these terms, but never paid much attention to them because they didn’t apply to you. I never knew what a REIT was or a dividend stock.
I started hearing these terms and was really intimidated by the size of knowledge I had yet to learn. It’s easy to look at that mountain of information and pull back. I urge you to push forward instead. Ask questions, watch videos, read articles or simply google any term you don’t understand.
The more you know about the topic, the more comfortable you will be with said topic.
I don’t want you to come here walking away more confused than when you sought out this information. I want you to gain this knowledge by looking at simple and easy to understand breakdowns of investing.
When you are paying off debt, saving a rainy day fund or cash flowing a purchase, you set goals. It is the exact same in the investing world. Since this is a familiar practice in the personal finance world, this may be where you are most comfortable beginning your investing journey! These goals can look like this:
1. What do you want to get out of your investments?
• Passive income through dividends?
2. Set a timeline goal
• Long term investor
• Short and long term
Don’t be afraid of your goals looking sparse in the beginning– as you become more seasoned with investing, investment terms and seeking out information, these goals are likely to grow and maybe even change.
Just like with setting goals, start small while you are learning your way around investing. Once you are confident with investing, you can increase your contribution amount.
Start dabbling in investing and you will be surprised at how quickly you catch onto it.
My advice is to start with a hundred dollars per month. Literally make a line item in your monthly budget for investing.
You can then put more money into the account when you’re ready.
Create a strategy
This is where your goal setting comes into play. What you wrote down as investing goals will be a road map to your investing strategy. If you are 40 and you want to retire early through investing, your strategy will be more intense and risk taking in the investment world.
If you’re 30 and you want passive income through dividends, you may be risk averse and reach your goals, because you’re in it for the long haul.
Everyone’s goals are going to look different and your age matters when it comes to your investing strategy.
What are your goals and how will your strategy allow you to reach those goals through investing?
My biggest piece of advice when creating your investment strategy is to no matter what, be diversified. In other words, don’t put all your eggs in one basket.
If one investment performs poorly, the others you have invested in will make up for those losses. If you only have invested in the investment that performs poorly… well, that’s all you have.
Diversification is the key to success.
Don’t get discouraged
Trust me, the market will go down and you will feel like you lost money. Our net worth went down over $30,000 this spring because of the Coronavirus pandemic.
The market will recover, and to be honest, when it was down, we kept putting money into our accounts. That’s the best time to buy and we got shares cheap!
If you feel confused and you just don’t get it, keep going. Go back to step 1 and educate yourself. There is so much information out there. Always be learning.
I have a full investing for beginners playlist that I’ve created for you to learn about investing in simple terms and I’m currently working on a new course on “How to get over the fear of investing” that will be launching soon!
Ways I save money:
Here at Freedom In A Budget, I am all about saving money! Here are some of the EASY ways that I save money:
• Fetch Rewards is a free grocery savings app that rewards you just for snapping pictures of your receipts. That’s really it. Free gift cards on groceries on thousands of products every day, no matter where you get your groceries. Just scan your receipts and get gift cards from places like Amazon, Target, Ulta, Applebees. Use code QHKBH to earn 2,000 points ($2)!
• Rakuten/Ebates: Rakuten is my to go way to earn Cash Back from over 2,500 stores like Macy’s, Amazon, Sephora, Walmart and much more. Join Rakuten today for free, and you’ll get a $10 Cash Bonus to get you started! Every three months, you’ll get a Big Fat Check in the mail or a PayPal payment just for shopping.
• Credit Sesame offers Credit Score and Monitoring, Savings Recommendations and Identity Theft Protection. ALL FOR FREE.
• CIT Bank CDs provide a safe, secure way to grow your savings. With the CIT Bank No-Penalty CD, you get the security of an 11 month CD with no withdrawal penalty seven days or later after funds have been received.
• M1 Finance is an easy to use brokerage platform that allows you to invest in Fractional Shares and auto reinvest!
• Webull Get 2 Free Stocks on WeBull when you deposit $100 (Valued up to $1400).
• Budget Templates: Excel budget templates with pre-populated categories and formulas to keep you on track with hitting your financial goals.