Why Aren’t You Investing, Yet? 5 Simple Tips to Get Started
“I wish I could give you this feeling, I’m planking on a million.” — Jay-Z & Kanye West (Gotta Have It)
That One Thing That Everyone Is Telling You to Do
Parents, guardians, and mentors (plus everybody else) from all walks of life probably told you at some point that you need to “invest”. Let’s call them “Mr. Advice.” Mr. Advice told you that investing was the gateway to wealth. And they weren’t lying. But “investing” is a pretty broad term. There are zillions of different ways to invest, all with different risk profiles and average returns.
Eh, so maybe Mr. Advice was talking about investing in stocks. Before you start ballin’ like Warren Buffet, you probably need to start small. But how exactly do you start?
For many young investors, the hardest part is getting in the game. However, today’s economy makes investing more accessible than ever. You just have to take off your warm-ups and start playing ball. As with everything else in life, it’s not how you start, but how you finish. I’ve created a quick and dirty list of tips to get off the sidelines and get into the game.
“It’s not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for.” — Robert Kiyosaki
- Start investing today using technology — What if I told you that you could start investing at this very moment? What if I also told you that you can start your investment career with almost no money in the bank? Using investment platforms geared towards millennials such as Stash and Acorns allows you to get real life experience with investing without the risk of investing all your money directly into one stock. Both make it very simple to invest. I talk about these platforms a bit more here. Both companies also offer great educational resources for green investors. These platforms are fantastic starting points.
- Invest in what you know — I’m sure that most people have heard the phrase “invest in what you know”; it’s one of Warren Buffet’s famous pieces of advice. He’s basically saying that if you constantly are following what Facebook is doing, then you should look at Facebook as a potential investment. Some investors note that if you only invest in what you know you’ll end up missing some great investment opportunities, but investing in what you know is once again a great starting point. Once you clearly understand what drives one company’s business, you’ll have less difficulty jumping into another industry.
- Think long-term — Wealth isn’t made overnight. Delayed gratification is the name of the game. Your favorite company didn’t become a billion dollar brand overnight, so why invest with a short-term mindset? If you’re going to take the time to learn the ins and outs of a promising company, you should feel comfortable parking that cash in their company stock for a few years. Besides being a better strategy for the everyday investor, investing with a long-term mindset will also prevent you from paying a higher tax rate when you cash out on your investment. More on capital gains tax here.
- Have conversations with friends about investing — I’m a firm believer that thinking about the “right things” will always lead you to the right path. If you want to make money, you better start talking to your friends about money making ideas more often! This conversation environment can be with one friend or with a group of friends. Feel free to get a seasoned investor in the mix. You’d be surprised at how many people are willing to help folks learn.
- Read books — I wrote a post about foundational literature for all wealth seekers. These books set a great precedent for future learning. Investing builds upon the strong fundamentals of budgeting, saving, discipline, and increased income. Some great reads are “The Intelligent Investor”, “The Little Book of Common Sense Investing”, and “A Random Walk Down Wall Street”. Education is a lifelong journey. If you plan to become a better investor, you must invest in learning new information.
What’s stopping you from becoming an investor this very moment? The earlier that you begin “playing the game”, the more practice you’ll get. Practice makes perfect, right?
For folks who’ve been investing for a while, what are some other tips that you’d give a new investor? What have been some of your biggest successes and failures in investing? I’d love to know your thoughts.
As always, please feel free to comment, follow, like, and share.