Investing money is a concept that we all have heard several times in our lives, but it is seriously something we all should start taking steps towards doing. We live in a world where money is the ruler and like it or not, we need currency to further most of our dreams, goals and aspirations in life.
Knowing the best and simpler ways to begin investing could help you gain better confidence in managing your finances for the long term. Our friends at Hipsternomics.com lent us a helping hand in scouring the web to compile some of the best resources known, in order to create an easy guide towards investing financially in your future.
Purchasing Stocks Directly From a Company
Dividend Reinvestment Plans and Direct Stock Purchasing programs, allow you to invest small amounts of money into dividend-paying stock, by purchasing directly from the company. Many companies allow you to make regular purchases of very small amounts of stock, and reinvest the dividends, while avoiding brokerage commissions and fees.
Investing in Mutual Funds
Mutual Funds are great options for new investors looking for a relatively less risky way to invest their money in small amounts, with a consistent return on investment, yearly. Mutual funds are, by definition, diversified, meaning they are made up a lot of different investments in stocks, bonds, or other assets covering diverse industries globally. In addition to the asset diversification, mutual funds also provide liquidity, economies of scale and are professionally managed.
401k
If you have a job that offers 401k, this should be your best starting point to investing. Here is why:
- Your employer takes care of most of the paperwork and even makes direct contributions for you via salary deferral.
- You get an instant tax break. As long as you do not touch your retirement fund, your dividends, interest and capital gains accumulate tax-free.
- Most employers also offer matching contributions to their employees dollar-for-dollar, generally around 3% to 6% of your salary contributions. This is extra free money you would put towards your retirement, so it is best you take advantage of it and maximize your 401k.
Apps That Helps You Invest
Since we are in a technology age and with the increase in popularity of mobile phones and apps that optimizes our daily lives, technology is breaking the barriers of traditional investing and making it more accessible. Here are some apps that aims to help entry-level investors get into the market and invest for future:
- iBillionaire Index – If you find yourself stuck on what companies or funds to invest your money into, this app makes that easier for you by tracking the activity of billionaire investors who are chosen for both their proven ability to perform well in the market long-term and also their status as industry thought leaders. The app provides a constant stream of information about their investments, and tells you what these billionaire finance gurus are investing in so that you can piggy-back on their investments.
- Acorn – Is a mobile app that lets you connect your debit or credit cards, along with a checking account, and then every purchase you make on those cards gets rounded up to the next dollar, and the app invests the difference for you into low-cost ETFs. You can deposit as little as $5 in recurring frequency of per day/week/month, and no matter how much you invest, you can use the app to estimate how much your money will grow in future years, which makes this a very valuable tool. The app costs $1 a month, and 0.25% to 0.5% of your investment annually and you can estimate how much you’ll pay in fees on the site.
- Robinhood App – This smart phone app makes investing in the stock market very simple and cost effective. Once you find a company you like, simply tap the “Buy” button, specify the number of shares you want, and you’re done. The app allows users to buy stocks without paying a commission, which typically costs the individual investors between $7 to $10 per trade. Users don’t even have to maintain a minimum account balance, which is a common requirement of other stock brokerage services.
Here are some sites to provide more information about investments:
Disclaimer: This does not constitute a recommendation to buy or sell any listed security or fund. We are NOT financial advisors. You should consult a financial advisor before altering your finances.