Successful Investing involves creating an auto system – once you get started, it becomes much easier to manage. Getting started is the hard part… 80% of millennials are not invested in the stock markets. More than 40% believe they don’t have enough money, and 34% said they don’t know how to get started (CNBC).
Getting started shouldn’t be as hard as it sounds – below are the basics you need to review before you get started on investing:
As indicated in the Millennial Savings Guide, one of the most important rules is to Set Automatic Contributions to your investments. Have a good understanding of your cash inflows, and outflows. Deeply analyze this part; is there any strategy you can execute on how to save your cash outflow? Or are there any strategies you can do to increase your income?
These are the types of questions you should be asking yourself when dealing with your personal finances. Something as simple as limiting your spending on things you don’t need can make a huge difference. Maximize any incentive you have access too (i.e. pension plans offered by your employer, taking advantage of any discounts available).
What’re you saving for? You really need an end goal here. This is what will keep you motivated, and help you stay on the right track in terms of managing your personal finances. Common goals include, but not limited to, saving up for a house downpayment, and saving up for additional education. Or, you can have a generic goal, such as saving for a million dollars. However, I highly recommend to have an end goal – it makes it much easier to achieve the next milestone.
Use the compound interest calculator offered on Get Smarter About Money, play around with the numbers to see how much you’d have to save, to reach your end goal.
Now that we have the two basics down, initiating a savings habit, and establishing your Financial goals – we can look into the auto strategy of investing. This is where robo-investing becomes useful. It serves two main purposes: cutting the research (saving you time and money), and automatically investing based on your personal finance situation. I also consider it as the investing shortcut for millennials.
Again, linking back to savings habit, create an account on a robo-investing platform, and set automatic contributions from your bank account. This is the easiest way to get started, since this solves the ‘I don’t know where to get started’ factor that many millennials face, when it comes to investing.
Currently, JustWealth has a promo for Bay Street Blog readers, where you’d receive a $50 credit when you sign up for a robo-investing account.
Those are the basics to getting started on investing. Start small – no need to rush into stocks right away. There are many resources out there to help you achieve your personal financial goals. All in all, being a successful investor involves being well informed of the general market trends (Bloomberg is a great source for this), and being disciplined with your financial habits.
As a beginner (or at any level), take advantage of robo-investing. These are much better alternatives than mutual funds. Robo investors typically trade ETFs, instead of mutual funds. This strategy alone saves you at least 2% – 3% of your hard earned money.
In the upcoming posts, I will be writing more about robo-investing and its benefits. If you have any questions, feel free to comment below or shoot me an email at [email protected].
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Writer: Jelani Smith
Disclaimer: All investing can potentially be risky. Investing or borrowing can lead into financial losses. All content on Bay Street Blog are solely for educational purposes. All other information are obtained from credible and authoritative references. Bay Street Blog is not responsible for any financial losses from the information provided. When investing or borrowing, always consult with an industry professional.
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