The Beginner’s Handbook to picking the right investment for your bank account and your lifestyle

Your first investment is right around the corner

There is a common misassumption that you must have excess money before you start investing. But then you spend all of this time waiting for this magic day of overflow that you end up never actually investing. There’s just never enough money to do so.

The first step is to change how you think about investing. Don’t think of it as an expense or something that only wealthy people do. Think of it a different kind of bank account that you can’t readily spend from. Think of it as your net worth or value. I tend to look at my checking account as the beginning, middle and end of my body of wealth (or lack thereof), making it difficult for my brain to collectively identify other value containers as a piece of the puzzle.

The truth is that that elusive excess money you are looking for can come more quickly as a result of investing. It is one of those crawl-before-walk scenarios. You invest to produce excess, you don’t produce excess to invest.

I formerly was resigned to the Maybe Someday Investment Plan, clinging to my paycheck, distributing meager funds to my “Just in case” emergency account, meanwhile spending money on entertainment, clothing, and food with reckless abandon.

I’m not one for budgeting — still working on it mom! — but one day I happened upon an embarrassing bank statement that read like one long, extravagant restaurant menu punctuated by shoes and clothes. And after adding it all up, it occurred to me that I was literally eating and wearing my potential investment money.


So where do we start?

When trying to figure out where to start investing, there is a lot of information out there. But like any financial decision, one size does not fit all. It’s not just about numbers — many factors of your lifestyle require consideration as well.

Let’s first define what an investment actually is. There are a lot of false investments out there but the bottom line is that an investment is something that can gain value over time. Your initial capital can exponentially increase, becoming worth more than what you paid for it. We’ll define an investment as anything that has the potential to make your money multiply.

It is also important that we don’t confuse liabilities with investments. Even commonly assumed assets can be liabilities. A car or a house is not necessarily an asset until it is no longer costing you money. It is also not an asset if you, in turn, lose money on it. This is where bad investments can arise.

6 lifestyle factors to take into account

We want to make sure that our investments match our lifestyle. You don’t want to end up investing in something that you can’t manage. A smart investment can quickly become a dumb one if you’re not savvy.

Here are a few questions to ask before embarking on your investment journey:

  1. How much risk can you take on reasonably (and emotionally)?
  2. You’ve probably heard “risk big, win big” plenty of times but you don’t want to sacrifice your wellbeing in pursuit of that. It can be very stressful waiting for your investment to return a profit, especially if the markets are volatile. If you invest all of your savings in the stock markets only to check the DOW every 5 minutes, you will take a toll on your sanity.
  3. What are your standard expenses?
  4. From those expenses, can any of those be redirected or eradicated completely? I.E, are they all necessary or urgent? Even with debt, there are some circumstances that may actually benefit from you deferring so that you can allocate your money to increase first and then you can resume your payments. It may seem counterintuitive, but in many cases, it is better to pay yourself first so that you are better equipped to pay more to your debts later. Don’t sacrifice your credit for this deferral but explore your options.
  5. Are you looking for a quicker yield (generally higher risk) or are you trying for a slow and steady investment?
  6. There are plenty of options for flipping an investment quickly, but they can either have a lower yield or a higher risk than something that simply accrues value over time. Identify your desires for investing and then allocate your money accordingly.
  7. How much time can you invest in your investment?
  8. Some investments run on autopilot. You put your money in and don’t think about it another second until you’re ready to take it out. Then there are those that require maintenance and more a more watchful eye. Know how much time you’re willing to take on because high maintenances option can get out of control if you’re not prepared to dedicate time and effort towards it.
  9. What are your investment goals?
  10. It’s good to approach investing with a specific goal in mind. You can then figure out what kind of investment would help you achieve this goal. Recurring returns may be more useful for someone looking for financial security versus lump sum returns that may apply to someone more interested in a cushy retirement. Try to identify an ideal dollar amount and a deadline by which to reach that amount.
  11. What is your income level currently? What percentage of that can you invest?
  12. Your income is the initial foundation upon which you are building your investment portfolio so it is paramount to your beginning stages. This will help you identify how much you are comfortable with starting with right now. Rarely can you invest more than what you currently have. See what your income covers according to your usual budget and then budget your investment in. Your income assessment may vary if it is a one-time investment versus one that you may feed on a periodic basis.
Picking the right investment

Types of Investments

This is just a crash course on a few types of investments that vary from traditional to modern, maximum effort to minimum, long to short term. I have added some useful links so that if you see something you like, you can gather more information to get further educated and get started.

Time and money are the two primary start-up factors in your investment to consider. We will use the following key to identify the time and financial responsibility necessary for succeeding in this investment type:

Time required

$ Money required

Modern Investments

We’ll start with a modern approach to investments. Technology has evolved our day-to-day life and the finance sector reflects this change. There are some interesting new ways to dip your toes into the investing world.


It took me about 3 minutes to make my first investment in cryptocurrency. I just downloaded this app and I was all set. From the app, you can invest, sell, trade and check the daily valuation. You can also trade cryptocurrency, which would take more time and effort.

$ You can start with as little or as much as you’d like. Since I wasn’t sure what all the hype was about, I just bought $20 worth of Ethereum and $20 worth of Bitcoin. That way I could develop my understanding with a hands-on approach. As I gain more confidence, I plan to feed it a bit more on a monthly basis.

It is quite the trending topic at the moment, confusing to most of us who prefer the concept of tangible money as a symbol of value. To barely scratch the surface of the what’s and why’s of cryptocurrency, (a long conversation for another article, friends) its value is determined similarly to the speculative nature of stocks. — With one distinguishing factor. Cryptocurrency can be transactional, meaning you can buy things with your investment. Few companies have gotten onboard with accepting bitcoin, (Overstock, Microsoft and Expedia are several of the early adopters) but this should expand over time.

This speculative quality makes it quite volatile but it is still in the midst of its infancy, meaning the growth potential is strong. Right now, the most popular form of crypto is fluctuating around the $10,000 mark.

Yes, this means that in order to buy 1 whole bitcoin, you’d have to put down $10,000. But you can still buy fragments of a bitcoin, meaning that you can invest anything from $5-$5000. The trick to the trade is nothing new. You buy low and sell high.

Resources: Weigh the Pros & Cons | The Future of Cryptocurrency | Terms to know | If you want to get into trading | Everything you need to know

The sharing economy

The sharing economy is a great way to capitalize on the investments that many of us have out of necessity.

Space sharing -

Sharing a home or workspace with someone can require a lot of maintenance and managing. It is not a set it and forget it kind of investment. I ran an Air BnB out of an apartment and I spent a lot of time marketing my space, monitoring pricing fluctuation based on competition (neighbors) and events. This is in addition to facilitating my guests by communicating with them, cleaning the home, filling the fridge with food and drinks, and coordinating key pick up and drop off.

$$ Space sharing requires ownership of a space, which, in most, cases may require thousands of dollars in start-up capital. You will also likely provide a clean, furnished space, which comes with a separate pricetag. Furthermore, your space may carry recurring utilities, rent, HOA fees, and/or a mortgage. However, with the operative word being “sharing,” you may already have this space out of general bear necessity.

Air BnB, Oasis or Home away

This one is a great option for anyone who travels frequently or is able to find a cheap place to stay while you accommodate your guests. (Staying in a hotel only increases your overhead!) I’m fortunate enough that my parents don’t live far from me so I can just go home.

Being able to rent out your home that you already pay for is a great way to not only eclipse your rental expenses but you may actually glean a profit. If you are unable to leave your own home for extended, often random, periods of time, you may either market a spare room or try investing in a separate property.

Just be mindful of both your fixed and variable expenses. In addition to your standard utilities, you may also need to take on cleaning expenses. You don’t want to take on another rent or mortgage and not break even. And always, always, know the terms of your lease. Some places do not allow subletting in any form, and you don’t want to end up with an eviction because you failed to read the fine print.

Some tips for a successful vacation rental are location location location! The better the location the better the pricing of your home. Be mindful of events in your area. You can increase pricing if there’s a big game or conference in town. Provide your guests with a unique experience. Leave a brochure of your favorite local recommendations. Fill the fridge with continental breakfast items. Find out their favorite kind of wine and have it ready for them when they check in. Your reviews are everything so make sure that you have a clean reputation.


Another great option for absorbing the costs of rent is sharing your space for people to rent out for shorter period times. People use peerspace to find unique and cost-effective locations for their meetings, events, photoshoots, etc. It’s a great way to make your office work for you!


Uber, Lyft or Uship are great sharing economy options to help with that car note. Turn your car into a taxi (Uber or Lyft) or a courier (Uship). Zip car and relay rides allow other people to outright share your car and Liquid let’s people rent your bike.

Just Park — This another approach to space sharing. Some cities have nightmarish parking. If you are exempt from this issue, you may try selling your parking space to somebody for short or extended spans of time.


Poshmark lets you sell your clothes that you don’t wear anymore and Style Lend lets you rent out designer clothing items.

Crowdfunding The JOBS act of 2012 made crowdsourcing funding legal and, as a result, some really interesting investing opportunities arisen Peer to peer lending -

Prosper or Lending Club facilitate modern day borrowing where you can sign up to lend money under the agreement that the loan is repaid with interest

Real estate -

Real estate is commonly thought to come with an expensive barrier of entry. But crowdfunded real estate can be a viable access point for less-experienced or less-equipped investors.


Investing in startups can provide you with equity in a company on the rise. Seed Invest, WeFunder, MicroVentures are great starting points for early investors.

Domain Names

The value of a domain is benchmarked on scarcity. And a couple of decades into the internet invariable leaves us with but a few untapped domains. This leaves domain owners in a potentially lucrative position. Valuable domain names are increasingly diminishing so if you own a domain that someone else wants, they may want to pay quite a lot for it.

Passive investment portfolios

Acorns is a clever app that rounds up your transactions to the nearest dollar and invests the change into the stock market. This is the kind of autopilot stock investment that is perfect for beginners.

Traditional Investments

These are the tried and true investment mediums, their reliability and potential ROI proven to stand the test of time. Many of these options may provide are less volatile and time-consuming, perfect for someone who is looking for no-frills, low-risk investments.

Real Estate

There are many ways to invest in real estate. It can have quite the financial barrier to entry but can certainly have quite the return on investment. There are many factors to take into account when finding a property to invest in. Location is an obvious starting point but there are underlying factors that you will consider too. Your purpose is another starting point. Are you going to rent it out, buy low (like due to foreclosure) renovate it to flip for a profit? Rental income can provide a recurring income but you essentially become a landlord, which can be extremely time-consuming. These are but a few options that can vary incredibly on how much time and money will be needed after the initial buy.


While this may initially sound abstract, education has one of the highest and most overlapping returns that you can muster. And these days, it doesn’t have to have to be a traditional university supplying that knowledge. Online courses, seminars and classes are as rich with relationships as they are with knowledge. And you can manage your own time, many times getting the knowledge you need in less time than a college curriculum.

401Ks and IRAs |

These are retirement funds that you generally do not touch until you have reached retirement age. Though very similar, 401k’s primarily differ from IRA’s (Individual Retirement Accounts) in that they are employer-sponsored retirement plans.


Many of us have at least some familiarity with the stock market, whether from grade school textbooks or mid-century themed movies. Stocks are probably what first comes to mind when one thinks about investing, but they have a certain caché. The stock market is notoriously volatile and largely unpredictable. Even trained professionals rely a lot on luck. But when you strike gold, you can really strike gold.


Bonds are long-term investments that offer fixed rate returns. They are great for someone would like a steady return without the risk. The returns can be much lower but they don’t come with the stress of an unpredictable investment.

Index Funds and ETFs

Index funds and ETFs (Exchange Traded Funds) are passive strategies to invest in the stock market. Rather than investing in one company or a series of companies — which can require a lot of education, strategy and luck — you are investing in a broader index. They trade like stocks, but rather than concerning yourself with the ups and downs of a sole company, you are investing in the welfare of an overall stock market.

Mutual Fund

Mutual funds are a stressless investment, as your money is pooled with other individual investors and/or companies and then invested in shares by fund managers. A fund manager’s entire job is dedicated to the savvy investment of the collective funds. Knowing there is a trained eye on your investment can provide you peace of mind that your money is well taken care of.


A certificate of deposit is a deposit you make to the bank with the agreement that the bank can actually use those funds until the deposit’s maturity date. The maturity date can be as short as 3 months and as long as 5 years. When you withdraw the deposit, you will have the amount of your initial deposit plus accrued interest.


Gold may seem like an antiquated concept of currency. It bears little use to many of us outside of jewelry. But gold’s value is not so much found in its immediate transactional function, but rather its stability due to its intrinsic value. People appreciate this as an investment in relation to paper money’s susceptibility to inflation.

Originally published at Pursuit of Daydreams.