Beginner Investing Strategies for Freelancers

Freelancers, use these beginner investing strategies to start making your money work for you.

Christian Lowery
Apr 3, 2019 · 6 min read
beginner investing tips for freelancers

Have you ever found yourself daydreaming of a retirement account with a 5% employer contribution? I sure have.

To find stability in place of a traditional retirement account, and build wealth over time, every freelancer should consider investing a portion of his/her income. I know, you’re probably thinking, “but investing is so complicated…” or, “investing takes too much time and I don’t have the money to pay a financial advisor.”

To invest your money, you don’t have to be an economic expert or financial guru that can read complicated charts and mathematical equations.

The concept of investing sounds scary at first. You’d probably rather watch Netflix and chill rather than read a book about stocks and bonds. But what if I told you that by following a few simple beginner investing strategies, you too can grow wealth over time and maybe even make some passive income for rainy days of the future.

To invest your money, you don’t have to be an economic expert or financial guru that can read complicated charts and mathematical equations.

I taught myself how to invest by reading a book, listening to successful investors, and practicing over time. Just start with the basics, and grow from there.

Sitting on your money like an egg that’s about to hatch isn’t going to give you income security. Being as stingy as possible with this month’s freelance income isn’t going to make you any better off next month. If you want to be a successful freelancer who builds wealth over time, consider these beginner investing strategies to make your money work for you.

But first, before diving in, here’s a list of the questions we’ll cover in this article:

  1. What is dollar-cost averaging and why is it important?
  2. How do I find companies to invest in?
  3. Where do I actually buy stocks?
  4. Should I set up an IRA?
  5. Where can I learn investment lingo?
  6. Why is investing so important for freelancers?

First, what is dollar-cost averaging and why is it important?

As Investopedia writes, dollar-cost averaging means “investing a fixed amount of money in the same fund or stock at regular intervals over a long period of time.” It’s pretty simple to understand. Basically, you invest the same amount of money, in the same stock or fund, at the same time each month — or week, or day, whatever you decide.

Most people don’t invest in stocks or bonds because of fear — fear of the unknown and, more importantly, fear they’ll lose money. But when you dollar-cost average, you remove the guessing game from buying stocks or mutual funds. You know you’re going to invest the same amount each month, regardless of what’s going on in the stock market as a whole. Dollar-cost averaging helps you build wealth steadily over time, it removes the fear, and it also helps you stay focused on other things — like taking on new clients or negotiating higher freelance rates.

So, how do I find companies to invest in?

When you’re looking for new companies to invest in, all you really need to do is spend a little time researching on Google — or your other favorite search engine. To keep it simple, look for a growth mutual fund and dollar-cost average. Unlike stock in just one company, a mutual fund is a collection of stocks, bonds and other assets that are operated by professional money managers. They make your life easier because you don’t have to pick and choose your own companies. Instead, you just pick the best mutual fund with the right basket of stocks.

To find investing opportunities, type these questions in a search engine:

  • What are the best growth mutual funds to invest in?
  • Which sectors are seeing the best growth?
  • What companies should I invest in right now?
  • Which industries are likely to see the most growth in [year]?
  • What is a good mutual fund with low fees?

Where do I actually buy stocks?

Once you’ve found a good investment opportunity, such as the top 3 e-commerce stocks or 5 investing opportunities for April 2019, all you need to do is set up a profile on an online trading platform like E*Trade, Fidelity or Interactive Brokers. These platforms are user-friendly and not difficult to understand. If you’re new to online investing, consider watching a short video that takes you through the steps of opening an account, funding it, and buying your first stock or mutual fund.

Should I set up an IRA?

An IRA, or Individual Retirement Account, is essential for freelancers who don’t have a 401(k) or other types of retirement savings account. To understand the difference in a Roth IRA and Traditional IRA, I recommend watching this short video for an overview of what an IRA is and how they work.

The great thing about setting up an IRA is that you can usually do it right from your online trading platform, like E*Trade I mentioned above. Not to mention, IRAs are tax-deductible and that’s a huge benefit for freelancers who pay self-employment tax.

Where can I learn investment lingo?

Words of the day are great, but financial terms of the day are greater. You can learn investment lingo and become a better investor just by signing up for Investopedia’s Terms Newsletter which sends you a word or phrase every morning. Some terms are simple, some are more complex, and each comes with a short description and supporting example. You will absolutely become a smarter investor over time, just from checking your email.

Why is investing so important for freelancers?

Investing as a freelancer is important because it can help you build wealth over time, and that’s necessary for freelancers who don’t know if/when a client may no longer need their services. The truth is, investing is important for everyone, but it’s more important for freelancers who don’t have retirement accounts or a 401(k) that grows wealth over time.

the best book for beginner investors to read is The Intelligent Investor
the best book for beginner investors to read is The Intelligent Investor

You hear that? It’s the faint echo of Warren Buffet recommending this book to everyone he passes on the street. The Intelligent Investor is basically the bible of investing. This book teaches you everything there is to know about the stock market, bonds, and how to be a smart, long term investor. Be warned, the book is dense — but it’s oh so worth reading.

You’re probably wondering, “but can’t I just hire someone to help me do all this stuff?” Yes, you absolutely can. But financial advisors often come with fees that you may not be able to afford. And even if you do hire a financial advisor, knowing what you’re talking about will make you a much better investor anyway.

Once you get the hang of it, investing can be really fun. Who doesn’t like to watch their money grow, right? Especially when that money starts paying dividends, which could turn into monthly income if you own enough stock. Here are other resources that will help you learn how to go from an amateur to expert investor in no time:

The point of this article is to make investing sound less scary. I am not an expert money manager, but I did teach myself how to invest and I’ve seen triple-digit returns in less than a year.

Remember to keep it simple, and be patient. You shouldn’t start investing to get rich overnight. Instead, start investing to make your money work for you over time. That way, if/when your freelance income gets low, or a rainy day comes, you’ll have a strong wealth portfolio to fall back on.

Originally published on christianlowery.com on April 3, 2019.

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