6 answers
casey
Student
Edinburg, Texas
1
Question
Updated
1125 views
How do you invest?
I want to #invest #investment-management #investment #investing #invest #personal-finance
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6 answers
Tom Klein
Corporate Finance
5
Answers
Minneapolis, Minnesota
Updated
Tom’s Answer
Step 1: Spend less than you make. The difference will become the money you have to invest.
Step 2: Read the book The Simple Path to Wealth by JL Collins. It details out how ANYONE can become a successful investor with a few basic principles, self-discipline, and a long-term horizon.
Step 2: Read the book The Simple Path to Wealth by JL Collins. It details out how ANYONE can become a successful investor with a few basic principles, self-discipline, and a long-term horizon.
Jonathon Fluckey
3
Answers
Updated
Jonathon’s Answer
There's a lot of ways to answer this question:
1. Invest in yourself first with getting an education. Find a field that you enjoy that can pay you well for years to come.
2. Manage your expenses. Never take on unnecessary debt that you cannot afford to pay back
3. With positive cash flow, save the different to put towards a home down payment. Home ownership has a lot of utility to achieve financial independence later in life.
4. Always take advantage of workplace retirement plans. If they are offering to match your contribution, always get the maximum match
5. If you want to invest in the stock market, put your money in index funds if you are not interested in studying and following the market closely. Don't put your money in individual stocks unless you have done your homework, and have a plan for entry and exit
1. Invest in yourself first with getting an education. Find a field that you enjoy that can pay you well for years to come.
2. Manage your expenses. Never take on unnecessary debt that you cannot afford to pay back
3. With positive cash flow, save the different to put towards a home down payment. Home ownership has a lot of utility to achieve financial independence later in life.
4. Always take advantage of workplace retirement plans. If they are offering to match your contribution, always get the maximum match
5. If you want to invest in the stock market, put your money in index funds if you are not interested in studying and following the market closely. Don't put your money in individual stocks unless you have done your homework, and have a plan for entry and exit
Christopher Himberger
Experienced Associate at PwC
6
Answers
New York, New York
Updated
Christopher’s Answer
You can invest in most securities with the use of a brokerage account or other similar account such as an IRA. Start off by researching terminology on investopedia such as stock, bond, index. Low cost broad market ETFs are likely to be the smart choice from a securities investment point of view. (Example ticker symbol SPY)
Keep in mind you can invest in many other ways as well from Real Estate to Lending. Banks also offer high yield accounts, Certificate of Deposits etc.
Dhairya Dalal
AI Research Scientist @ Posh Technologies
104
Answers
Boston, Massachusetts
Updated
Dhairya’s Answer
Additionally, if you want to manage your own index funds or find other investment funds I highly recommend Vanguard. They tend to have the lowest cost funds and have a lot of useful resources.
If you feel more daring and want to trade stocks, check out Robin hood (https://www.robinhood.com/), which allows you to trade stocks for free. Traditional stock trading comes with a broker fee you must pay to have an agent make trades on your behalf. However be careful. Stock markets are volatile and you can lose a lot of money if you are not careful. Make sure you do your research, talk to your parents, and be smart if you got this route.
Finally, if you are interested in social impact vesting (i.e. investing in companies and spaces that are sustainable and make the world a better place), check out Swell (https://www.swellinvesting.com/homepage). The one downside is that they tend to have higher management fees (.75% of your portfolio). But they provide the portfolio breakdowns on their site. So you can essentially go onto Robin hood and copy their strategy.
If you feel more daring and want to trade stocks, check out Robin hood (https://www.robinhood.com/), which allows you to trade stocks for free. Traditional stock trading comes with a broker fee you must pay to have an agent make trades on your behalf. However be careful. Stock markets are volatile and you can lose a lot of money if you are not careful. Make sure you do your research, talk to your parents, and be smart if you got this route.
Finally, if you are interested in social impact vesting (i.e. investing in companies and spaces that are sustainable and make the world a better place), check out Swell (https://www.swellinvesting.com/homepage). The one downside is that they tend to have higher management fees (.75% of your portfolio). But they provide the portfolio breakdowns on their site. So you can essentially go onto Robin hood and copy their strategy.
Sugam Agrawal (sugagraw)
Delivery Manager
2
Answers
Bengaluru, Karnataka, India
Updated
Sugam Agrawal’s Answer
The best approach to start investing is:-
- Firstly, Get Insured --> Get Term Insursance & Medical Insurance(covering your dependent family members)
- Secondly, Create a "Contingency" fund --> Typical best practice is to save 6 to 7 times your monthly expenses and keep increasing it every year based on the increment in your monthly livinh expenses with a goal that you always have 6/7 times the monthly expneses available to you in fully liquid form
- Thirdly, put aside the monthly expenses from your pay-check and find out what best you can start investing each month (monthly expenses include all the outgo for insurance, contingency, loan payment etc. beyond the living expenses)
- Now you have reached a no. that you cna vouch for investment for each month
- You can either get an advice (need to pay for it) from an investment advisor OR start with the following approach: a) Depending on your age bracket(I am assuming you are in your 20s), allocate 70% of the available monthly sum to the Mutual Funds directly investing in Equity Market e.g. pick-up the perfomance history for any top rated funds and start investing without much thought b) Allocated remaining 30% in Debt instruments (advising for India based individuals) but again Mutual Funds only and not any FDs
- Remember, the earlier you start investing the better it is as you are sure to gain from "Power of Compounding". A simple mathematic calculation reveals that if you keep investing say a 20,000 INR each month for 30 years, you will end-up with a handsome sum of ~7 Cr. INR. Hence don't think much and start investing in any top rated fund. You can also keep checking the fund's performance once in a year but otherwise as far as you keep on investing, you WILL reap tyhe benefit for sure.
Happy Investing !!
Dhairya Dalal
AI Research Scientist @ Posh Technologies
104
Answers
Boston, Massachusetts
Updated
Dhairya’s Answer
Good question!
This is a space that's rather new for me. Given my lack of deeper understanding of the space, I tend to defer to existing vehicles. Generally, I like to take about 40-50% of my paycheck an put it into savings. The remainder is used for rent and living expenses.
Of the money allocated for savings, I distribute my it into two buckets: passive investing account (Wealthfront) and high yield savings account. The distribution is around: 40% Wealthfront and 60% rainy day savings. My approach is more on the conservative side, but you can research and find other approaches to savings and investment depending on your risk.
A general useful philosophy is to have a rainy day cache fund that should support you for at least 6months. For example, if your monthly expenses (rent +util+ food + other living essentials) is $500, you should aim to have a cash savings of at least ($3,000). This money you should never touch, but continuous add to. That saving should be in some sort high yield savings account (~1%). Most high yield savings accounts tend to be online banks (https://www.nerdwallet.com/blog/banking/best-high-yield-online-savings-accounts/) but sometime you may find local banks with competitive rates.
Passive investing is investing your money in a diversified portfolio of low-cost index funds. An index fund usually tracks the market. For example a fund could own a small share of all the companies in the S&P500. A lot of research shows that passive investing strategies tend to outperform most short-term market investment strategies. There is a slew of companies that automate the passive investing for you using bots.
These companies (Wealth Front, Betterment, Wealth Simple) usually have the same strategy. Depending on what your risk profile is, they invest your money in a mixture of bonds and ETFs. If you are looking for aggressive returns, they will weight your portfolio to emerging markets and Asian markets, while conservative risk policies will favor municipal bonds. The strategy for young adults is be more on the aggressive side with passive investing. As I mentioned above, I use Wealth front because they have really low service costs (.25% of your portfolio) and the first 10K is managed for free.
Finally, I try to max out my contributions my roth IRA every year. A Roth IRA is a retirement savings vehicle that allows you to defer taxes on your investments (taxes are levied upon withdrawal). You can contribute up to 5.5k per year.
So I've thrown alot out there. Feel free to ask question if any of this is confusing.
This is a space that's rather new for me. Given my lack of deeper understanding of the space, I tend to defer to existing vehicles. Generally, I like to take about 40-50% of my paycheck an put it into savings. The remainder is used for rent and living expenses.
Of the money allocated for savings, I distribute my it into two buckets: passive investing account (Wealthfront) and high yield savings account. The distribution is around: 40% Wealthfront and 60% rainy day savings. My approach is more on the conservative side, but you can research and find other approaches to savings and investment depending on your risk.
A general useful philosophy is to have a rainy day cache fund that should support you for at least 6months. For example, if your monthly expenses (rent +util+ food + other living essentials) is $500, you should aim to have a cash savings of at least ($3,000). This money you should never touch, but continuous add to. That saving should be in some sort high yield savings account (~1%). Most high yield savings accounts tend to be online banks (https://www.nerdwallet.com/blog/banking/best-high-yield-online-savings-accounts/) but sometime you may find local banks with competitive rates.
Passive investing is investing your money in a diversified portfolio of low-cost index funds. An index fund usually tracks the market. For example a fund could own a small share of all the companies in the S&P500. A lot of research shows that passive investing strategies tend to outperform most short-term market investment strategies. There is a slew of companies that automate the passive investing for you using bots.
These companies (Wealth Front, Betterment, Wealth Simple) usually have the same strategy. Depending on what your risk profile is, they invest your money in a mixture of bonds and ETFs. If you are looking for aggressive returns, they will weight your portfolio to emerging markets and Asian markets, while conservative risk policies will favor municipal bonds. The strategy for young adults is be more on the aggressive side with passive investing. As I mentioned above, I use Wealth front because they have really low service costs (.25% of your portfolio) and the first 10K is managed for free.
Finally, I try to max out my contributions my roth IRA every year. A Roth IRA is a retirement savings vehicle that allows you to defer taxes on your investments (taxes are levied upon withdrawal). You can contribute up to 5.5k per year.
So I've thrown alot out there. Feel free to ask question if any of this is confusing.