Provided by IMC! Peer Mentor: Jacob Streeter
If you are thinking about investing, do it! Start now! I can’t stress enough, the importance of starting to invest early. Investing may seem complicated, but with a little background knowledge and a simple plan, you can get a pretty good head start.
1: Learn What It Means to Invest
The first thing you’re going to want to do is to learn about investing. You need to understand that investing is risking your money today for a higher return in the future. Investing does not always mean you’ll get a return. Obviously, some investments are riskier than others and so you need to gauge your own risk tolerance.
2. Choose and Open a Brokerage and Trading Account
Today, there are so many options to start investing. For the rookie investor, I strongly recommend using an online broker and trading platform with a solid mobile app. The trading platforms that I recommend are TD Ameritrade, Fidelity, E*Trade, and Charles Schwab. TD Ameritrade is a great platform for beginners. Many of my friends use TD Ameritrade and they have never had an issue with it. Fidelity is great for people who like to be active on their investment account every day. E*Trade has a great web platform that is awesome for people who like to log in to their computer and work on their investments there. Lastly, Charles Schwab has terrific IRA retirement accounts. Experiment with the different platforms and find out which one is the best for you!
3. Invest!
Once you have chosen an online platform, learn about different investment products and invest! Common investment products include, but are not limited to, stocks, bonds, mutual funds, and exchange-traded funds (ETFs). I strongly recommend that beginners start investing in ETFs and mutual funds. ETFs and mutual funds are a way for investors to pool their money together in a fund that makes investments in stocks, bonds, and other assets. There are a few differences between ETFs and mutual funds. First, ETFs track market indexes, and mutual funds offer a wide range of actively managed funds. Next, ETFs actively trade throughout the trading day while mutual fund trades close at the end of the trading day. Lastly, mutual funds are actively managed, and ETFs are passively managed. I recommend these two options because they are relatively cheap investment options and they provide great diversification for your portfolio. Both options are less risky than buying individual stocks and have historically provided great returns.
Learn about investing, create your trading account, and invest! These three simple steps are great for anyone thinking about investing. Make sure to start early and be smart. For more information about investing, check out SEC.gov and Saving and Investing.
Have a great weekend!
Jacob
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