It’s Time to Re-Imagine Investing

Historically, investing in financial markets has been one of the best ways to build wealth. The S&P 500 market index, for example, grew an average of 7% from 1950–2009. Unfortunately, most Americans haven’t benefitted along the way: a mere 10% of americans own 94% of financial securities, and you don’t have to be a mind reader to guess who those 10% are (spoiler alert: older, wealthy, white men). Investing has also been very complicated, so wealthy investors needed seasoned, professional financial advisers to do it for them. All of this required meetings in wood-paneled offices, with suits, ties, dress shoes, firm handshakes, and 30+ page printed reports with confusing graphs and charts.

Fast-forward to 2016. The largest segment of the population is now under 33. It’s your time. And a lot has changed. You’re not rich. Not yet, anyway. But you’ve got big dreams, and the smarts and drive to achieve them. Your gender or skin color no longer dictate your ability to invest. You trust mobile tech solutions like Venmo more than banks and brokerage firms that have been around for more than 100 years — and those digital solutions can provide services on a massive scale with very low costs, and prices. You’re suspicious about handing your money over to someone to invest it for you. Instead, you want to know exactly where it’s going, and why. You want to make informed choices. You want to become an investor, and manage your own money. You want to know what fees you are really paying. And you want to do all that the way you do pretty much everything — on your phone.

Here’s what hasn’t changed: The right way to invest. It’s actually pretty simple, despite what financial advisers might have you believe:

  • Scrape together a little extra cash. $5? $10? $20? That’s all you need to get started. Make one investment in a diversified Exchange Traded Fund (“ETF”). Here’s one. This may seem a little boring, but it’s just the beginning. Later on, you can pick some sexier investments. The key thing is to invest now, while you are young and broke. Sounds counterintuitive, but this is actually the best time in your life to start.
  • Hold on to that investment. You can look at it, think about it, research it. Just don’t sell it, unless your research uncovers something that changes your original belief. The price will go up and down, and it will make you think you’re doing well some days, and terribly on other days. The real secret to investing is that it just doesn’t matter what happens over the course of a few days, weeks, or even months. What matters is what happens in 5, 10 or 20 years. The one sure way to screw up investing is to try to buy and sell frequently.
  • Keep investing. Every week or two, invest a bit more money. Add to the investments you’ve made already. Add some others that could complement them well, like investments in industries, stocks that generate dividends, and bonds that behave differently from stocks.

Of course, there’s more to it. But it’s just icing on the cake. And you need to bake the cake first. If it sounds too easy, that’s just what you’ve been (mis) led to believe. Best of all, you can get started in 2 minutes, on your phone, with only $5. Give it a shot!

Past performance is not indicative of future returns. See disclosures here.

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