Easy Steps to Help You Get Started Investing
Investing is a great way to save for your financial future. However, it can be daunting to get started. Here is a quick guide to investing for beginners.
Set a Budget
The first step is to decide how much you want to invest.
Investing for Retirement. If you’re saving for retirement, one rule of thumb is to save between 10 and 15 percent of your yearly income.
Workplace Retirement Plan. If you have a 401(k) at work, make sure you are maxing out your contributions. That’s especially true if you have an employee match (which can count toward your 15 percent). That’s free money and you don’t want to miss out.
Other Investment Goals. If you’re saving for something like a house, consider how much you’ll need and work out a budget that will help you get to that goal in the timeframe you’ve set for yourself.
Open an Account
Once you have your budget set, it’s time to open an investment account, like an IRA or brokerage account. There are several online brokerages and even apps you can use to set up an account.
Think About Taxes. You’ll want to consider taxes here by first investing in ways that give you a benefit like a tax-deduction tax-deferred or tax-free growth for putting your money to work. This could be your 401(k) account at work or an IRA with a brokerage firm. Once you’ve exhausted your tax-advantaged options, look to a taxable brokerage account (where you can choose your investments) or an account with a robo-advisor, which uses algorithms to help you set your investment strategies based on your risk tolerance and investment time frame.
Consider Risk
You’ll need to think about your risk tolerance when you begin investing. This impacts the investments you choose. Consider how you’ll feel if the market goes down (which it will) and how you’ll feel when it goes back up (which it will). Stocks are considered riskier than bonds, due to fluctuations in the market. However, stocks, historically, have higher returns than bonds over the long term.
Do One Thing: Starting with a simple investment, like an S&P 500 ETF, can help you gain confidence and experience.
*Fortera’s Wealth Management Team is here to help you work toward a strong financial foundation. Providing members with access to retirement planning solutions offered through Osaic Institutions. The licensed and experienced Financial Professionals of Osaic offer thoughtful guidance designed to help clients understand their options and financial priorities. We’re here to help you navigate important financial decisions and work toward your long-term goals. Visit our Financial Planning page to learn more or give our Wealth Management staff a call at 931.431.3315.
This material is provided for educational purposes only and is not intended as individualized investment advice. Original article by Chris O'Shea and adapted in partnership with SavvyMoney.
*Investment and insurance products and services are offered through Osaic Institutions, Inc., Member FINRA/SIPC. Fortera Wealth Management is a trade name of Fortera Credit Union. Osaic Institutions and Fortera Credit Union are not affiliated. Products and services made available through Osaic Institutions are not insured by the NCUA or any other agency of the United States and are not deposits or obligations of nor guaranteed or insured by a credit union or credit union affiliate. These products are subject to investment risk, including the possible loss of value. For more information, please visit http://www.finra.org/ or http://www.sipc.org/. Members should consult a tax advisor for additional tax information.