If you’re like most women in my world, you’re new to tracking and actively managing your money. Although you feel like a baby giraffe on roller skates when it comes to managing your money, you might already have investing on your mind. Now is a great time to start learning about investing for beginners. I recommend you stay the course in continuing to track your money consistently. And, while you’re mastering the art of managing cash flow, you can begin to learn about investing. I want to start that conversation with you here.
Today is a great time to learn how to make your money work smarter for your future wealth. Let’s take a closer look at how to get started on investing money as a newbie. It can feel uncomfortable at first, and that’s where education comes into play. I’ll be here to break it down and to help you make smart money moves along the way.
Ever heard, “It takes money to make money?” It’s not entirely a myth. You can build wealth through working hard and saving. However, investing money in specific ways—like stocks, mutual funds, annuities, life insurance policies, and much more—can help put your dollars to work for you. That’s the concept of investing; You want your money to be working hard for you. Not the other way around.
You’re a smart woman and you already know how important it is to set aside money for savings. The problem has been that you’re not saving. That’s the first focus, and once you feel like you’re on track with saving, you can learn how to put a portion of your income in a smart money-building investment strategy. Depending on your tolerance for risk, this could include low-risk, low-return retirement account investments, high-risk investment opportunities, and everything in between. A recent eMoney Advisor survey found that 65% of American adults are investing. And, while stocks are the most common type of investment asset, with 48% of Americans invested in stock, cryptocurrency is a very close second at 43%. Further, In 2021, Gallup found that 56% of Americans reported that they own individual stock and mutual funds or have retirement savings accounts, like a 401(k) or IRA. While many Americans have embraced investing, at least on a small scale, many more of us still need to learn the basics in order to get started (especially women!).
Investing for Beginners – breaking it down
Investing is not just for the rich and wealthy. No matter where you are in your financial journey, you can learn how to put a portion of your money to work in a savvy way. Even a small amount can add up over time. As inflation costs continue to rise, investing your money in smart ways now can help add more back into your pocket down the road.
Investment Types
There are many ways to invest your money. Regardless of which direction you go, when you invest, you tap into the power of compound interest, which can transform the money you invest into a much larger sum over time. Investing works because earnings that you gain from interest build up over time, especially when you roll them over and reinvest. It’s like a snowball that grows as it gains speed and distance. The four most common investments you’ll see are the following:
- Stocks – Stocks or equities refer to the shares of a company that you purchase. The idea is to buy low and sell higher, although that doesn’t always work out when the stock market slumps.
- Mutual Funds, ETFs – Mutual funds and exchange-traded funds (ETFs) are groups of stocks that allow you to spread out your money and are generally less risky than individual stocks due to diversification.
- Fixed Income Securities – Think of these as loans to the government, corporations, state agencies, and banks. They might include: U.S. Treasury bonds, corporate bonds, municipal bonds, and CDs.
- Real Estate – One type of investment that almost everyone is familiar with is real estate. The idea of investing your money into a rental property or investment property in hopes of getting a return is very popular these days.
Risk Tolerance
The reason why some folks find investing to be intimidating is that it does carry a certain amount of risk. Even strategic and conservative investments carry risk and often require you to put your money somewhere that is not easily accessible. If you’re not sure where to begin to make a low-risk investment, work together with a trusted financial advisor or money coach who has investing experience to help you make smart money moves.
One great rule of thumb to remember when it comes to risk tolerance is this: don’t put all your eggs in one basket. It is better to know all the investment options available and make moves that meet your risk-tolerance zone and financial goals. Spreading your dollars across multiple investment opportunities means you are diversifying your portfolio and potentially reducing risk. But there is no one-size-fits-all approach. Your financial picture is as unique as you are, and so is your money mindset and your risk tolerance.
Investing First Steps
There are many options for getting started with investments that can help build a better financial future for you TODAY. Once you feel like you have a handle on your money, you can slowly build up your investor confidence. The NUMBER ONE most important thing about investing is that you learn how to hold on to money. That’s the key! Learn how to tuck money aside, and have it earn interest, dividends and gains. (I teach this stuff in my Savvy program too!). There are some safe places to start so that you can experience yourself investing and continue to learn at the same time. Ready to get started?
I recommend you start with one of the following options:
- Investment apps such as Ellevest, Robinhood, and Acorns
- 401(k) or employer retirement plan – this is a relatively safe way to start saving for your future and even get some of your money matched!
- High-yield savings accounts – low risk and you can learn how to earn interest
- Certificates of deposit (CDs) – safe option for beginners and teaches you how to hold on to your money for a fixed amount of time
- Target-date mutual funds – takes some of the guesswork out of investing while you’re learning.
The bottom line on investing for beginners
Building your wealth through investing your money in smart ways can help you have a more stable, stronger financial future. Learning how to make the right investments can give you the confidence needed to start putting your money to work for you. The best part? You don’t have to do it alone. No matter what your financial goals are, my community and I are here for you every step of the way. If you’re looking for a supportive group of women to support your money goals this year, join mine. If you are looking for help getting your $hit together or learning how to invest your money going forward, sign up for my next GIT Elevated Money Course today. Hurry, space is limited!