Thinking about how to kickstart your financial future, but your lack of experience has you overwhelmed? We are here to tell you that it’s never too early to invest in your future, and you don’t need experience! Check out our how-to intro to investing young to get you ahead of the crowd.
How Much Money Do You Need To Get Started?
The answer is zero! Some investment firms and banks are moving to a free or low-cost model, making it easier for new investors to get started.
Most first-time investors start off by micro-investing, which is when you add small amounts into an account where it grows moderately each year. The practice of Auto Investing helps your money grow in the stock market faster than it would in a traditional savings account.
Once you have gained more experience or gotten comfortable with a managed investment account, you might be inclined to add larger amounts of money to your investment account. With more experience sometimes comes more risk tolerance, so you may choose to be more aggressive with your portfolio or start to explore your options when it comes to picking and choosing stocks.
How Much Experience Do You Need?
Now that you know how much you might need to get started, ask yourself a few questions and find out where your level of investment knowledge and interests lie.
- Is this your first time investing?
- Are you looking for your investments to be fully managed for you?
- Do you want to simply gain more interest than in your savings account?
If you answered yes to all of the above questions, an easy way to get started is to set up a MoneyLion investment account. There are no minimums or management or trading fees associated with these accounts, and you can get started in just a few minutes. These accounts are fully managed, and you do not need any experience trading on the stock market.
What Can You Invest In?
Below we’ve listed a few different types of investments. MoneyLion portfolios invest in cost-efficient exchange-traded funds (ETFs) comprising a diversified set of stocks and bonds.
Stocks and ETFs
A stock is a security that represents equity, shares or partial ownership of a company, for example, Amazon. When you own stock in a company, you’re entitled to the proportional amount of assets and earnings in that company. An ETF or Exchange-Traded Fund is a collection or basket of partial ownerships of hundreds or even thousands of securities, including stocks, bonds, commodities and more.
Investing in an ETF means you’re investing in a broader swath of the market and not limited to one company’s stock. You can still buy and trade ETFs just like stocks, but they’re more diversified because the success of your ETF investment isn’t only reliant on one company.
Both stocks and ETFs can be bought and sold at any time of the trading day, on the stock exchange. Unlike Mutual Funds, which typically trade once a day and settle after the market closes. Also, most ETFs are known to have smaller fees than something like a mutual fund.
This type of investment strategy allows you to mutually pool your money together with a group of investors into something that would normally be difficult to recreate on your own. The price of the mutual fund, or net asset value (NAV), is determined by the total value of the portfolio divided by the number held shares.
Not sure you can (or want to) hang with the savvy investors? Don’t worry, these assets like stocks, bonds, or money market accounts will be professionally managed for you when you open a MoneyLion Investment account.
You can also start investing in mutual funds if your workplace offers a 401K retirement plan. Usually, your employer will match your contribution and automatically deduct your contributions out of your paycheck. No employer retirement plan? Look into a Roth IRA.
To read more about mutual funds, click here.
A bond is a type of investment where a lender loans a business or government money over a specific timeframe plus interest. Most bonds can be sold by the original bondholder to another investor; therefore, you are not obligated to be the owner throughout its contracted maturity date.
Although the specifics of a bond can vary, at the end of the day, the issuer (the borrower) and the investor (the lender) could draw up any legal provision they can agree on. There are several different types of bonds like Corporate bonds, Sovereign Government Bonds, and Municipal Bonds. If you don’t want to own any bonds on your own, this is where mutual funds or ETFs comprising a variety of bonds would come into play.
A commodity investment is made up of natural resources that are sold and traded. A few examples include grains, gold, metals, cattle, oil, fruit, cotton, and natural gas. Most commodities can be bought and sold similar to stocks on the Chicago Board of Trade (CBOT) and New York Mercantile Exchange (NYMEX). Usually, these raw materials are found within another product and make them a more difficult individual investment due to their bulk nature.
There are two different kinds of traders in commodities. The first are buyers and producers, and the second is speculators. The easiest way to invest is to buy the physical item itself and hope the value increases, for example, gold.
There are multiple strategies to real estate investing, including ownership, management, rental (including Airbnb, VRBO, etc) and flipping. This type of investing might take more money with risk but can be done profitably. With incentives for first-time home buyer programs with a little as 5% down and low mortgage rates, more young adults are investing in real estate.
Investors are looking to Airbnb and VRBO to capitalize on short-term and vacation rentals. If you are in a sought-after neighborhood or travel hub, some Airbnb properties can double your profits over long term rentals.
You could also become a landlord and rent out your property with your tenants paying your mortgage for you. If the property is purchased in the right market and at a good price, it may appreciate in value throughout your mortgage and leave you a valuable asset.
If real estate investing is calling your name, it’s best to start by finding a reliable real estate professional in your area and start researching potential properties.
Start Now and Invest Young
Now that you have the basic tools and knowledge, your next step is to find a bank that can also manage your investments. With MoneyLion, you can bank, borrow, and invest with a few clicks of a button. We can help you adjust your portfolio for a more or less aggressive approach based on your comfort zone.