How to Invest if You’ve Never Invested (A Beginner’s Guide to Investing)

how to investPerhaps you want to start investing your money but you’re just not quite sure where to start. It’s one thing to read about the stock market, but it’s a whole different ballgame to put your hard-earned money in there. Sound familiar? Investing can be confusing, especially when you’re new to it.

However, investing is a necessary tool used to grow your wealth. If you ever wish to be a millionaire, retire early or quit your day job so you can pursue your passion, you’ve got to start investing your money.

What is investing?

Put simply, investing is a way for your money to make you money. Sounds nice, doesn’t it? If you invest your funds, the goal is for them to grow faster than inflation. Since most savings accounts don’t even keep up with the rate of inflation, investing is a must if you ever wish to retire.

You can invest your money in stocks, bonds, mutual funds (a portfolio of stocks, bonds and other assets), real estate, gold and silver, peer-to-peer lending, CDs, small businesses and more. If you’re using your money in hopes of making money, you’re investing.

See Gold IRA: Smart retirement investment or not? >>

How can you get started?

At the very least, you should be saving for retirement. The earlier you begin saving, the more money you’ll have when you retire thanks to compounding interest, or earning interest on your interest. Let’s say you start with $10,000 in a retirement account that earns 6 percent. After year one, you’ve earned $600 in interest. That money is reinvested in the account, so on year two you earn 6 percent on $10,600 for a total of $11,236.

If you’re employer offers a 401K plan, sign up immediately. Most companies match a certain percentage of your contributions. If your company does this, invest at least the percentage that the company is willing to match. The money your employer contributes is essentially “free money.” Don’t deny it.

If you’re employers does not offer a 401K match, sign up for a Roth IRA at your preferred banking institution. A Roth IRA lets you contribute after-tax income toward retirement. Withdrawals made after age 59 ½ are tax-free.

Whether you are saving for retirement through an employer or on your own, this is step one of investing.

What else can you invest in?

Before investing your money further, you have to take a look at your current financial situation. Do you have money saved up in the event of an emergency? If not, start by putting aside 3-6 months of income into a savings account.  A good way to earn more interest than on a regular savings account is with a high-yield online savings account, such as Synchrony. Average interest rates on online accounts are 1% APY, compared to 0.03% APY on regular savings accounts.

See How to Start Investing Today With Only 500 Bucks >>

Once you are saving for retirement and have an emergency fund, the rest of your money should be invested. You can start with safer investments such as CDs or treasury bonds, which typically guarantee a specified rate of return. Riskier investments include stocks, bonds and mutual funds. Mutual funds are a portfolio of stocks and bonds and can typically be as risky or as safe as you choose.

With investing, the more diversified your funds, the better. As your wealth grows, you can start investing in riskier stocks, purchasing real estate properties or investing in yourself by starting a small business. The options for growing your wealth via investing really are limitless. 

Investing is not a “get rich quick” scheme but rather a slow and steady climb to the top. The sooner you start, the better off you’ll be.

How did you start investing your money? Share in the comments below.

 Author Bio

Donny Gamble Jr. is an online entrepreneur that runs a financial blog called Personalincome.org. He also is a frequent contributor to SmallBizTrends, Huffington Post, and many other personal finance blogs. Follow him on Twitter @donnygamblejr

4 Common Money Beliefs That Damage Your Marriage

j0309372In July, my husband and I tied the knot.

And like any couple, we wanted to start our marriage out on the right foot.

So partly because of the requirements of the church under which we were married, and partly because it’s good practice, we took part in pre-marital counselling – or what the church calls “marriage prep”.

In marriage prep, we learned about some of the biggest challenges in marriage. These challenges test your partnership and if you don’t already have a strong foundation can weaken your bond with one another.

Many of these challenges are brought on by beliefs that we hold because we don’t know any better. Or because we see our parents hold these beliefs and attitudes, and we pick up on them. Or just because we’ve been exposed to beliefs like this over and over again in our culture.

No matter how these beliefs are adopted, they undeniably damage a marriage.

So do you hold any of these beliefs?

1. If Only We Had Enough, We’d Stop Fighting…

Have you ever thought that if only you had enough money, you’d be happier, less stressed out? That your marriage would magically get better, and you’d stop fighting?

Because you wouldn’t have anything to fight about, right?

Well, not necessarily.

If you’re already arguing about money, having more of it won’t switch the argument stream off. It will just shift the tension to another area of your marriage. 

Why? Because money isn’t really the issue, usually. More often there is something underlying the money arguments.

For instance, if you are frustrated with your husband’s spending habits, the underlying issue may be that you have conflicting goals.

If you argue about purchases made in secret, the underlying issue is trust.

Work on both earning more money and working on the underlying issue behind your arguments.

2. We Shouldn’t Fight About Money

We’ve all heard that money is the number one cause of divorce in North America.

So it stands to reason that you shouldn’t fight about money with your spouse, right?

Since it leads to divorce, it sounds like the last thing you should do.

But that’s simply not true.

Arguing about money is not evil. It’s how you navigate money as a couple that can break down a relationship. 

You are two different people. You aren’t the same, so you are going to have different attitudes, goals, and beliefs. It’s only healthy to have differences. There isn’t one couple alive that is always on the same page about money.

You just need to be able to work out the issues in a productive way.

Because if  you just sweep the issues under the rug? They’ll fester like a wound, which is far more damaging than a healthy debate.

3. We Aren’t Partners if We Don’t Have Combined Finances

When we were about to get married, I was told by more than one couple that if we didn’t combine our finances completely, we weren’t in a partnership.

How could we go about being married if we didn’t share everything: money and all?

While my husband and I did combine our finances, I don’t subscribe to the idea that you’re not partners if every single aspect of your lives aren’t intertwined.

This is like ridiculously arguing that if you don’t have the same name as your kids you aren’t a family.

Assuming a marriage isn’t as strong just because finances aren’t completely combined is an indication of an insecure marriage.

So if you want to do things a little differently, do whatever works for you and your spouse.

You’re no less married if you don’t follow the herd.

4. It’s Tit for Tat

Before J and I got married, I unfortunately believed that everything should be equal.

Meaning, if I spent $40 on a dinner out with a friend, he should spend $40 on something that he wanted, and vice versa.

So when he went out and bought a new speaker for his truck, I’d think “OK, now what should I do with that extra $100 of spending money?”.

Luckily, I have snapped myself out of this silly mindset.

You’re partners in crime, not competitors. And there’s nothing that will drain your bank account more quickly than this “tit for tat” attitude.

Some couples battle this by allocating a portion of their discretionary spending to each member of the couple, like an allowance. Some just spend as it comes up an don’t take a tally.

However you deal with it, remember that you’re not in a race to drain your bank accounts.

 

Nobody is perfect, especially in marriage. And sometimes, the best we can do is to recognize these attitudes in ourselves and try to fix them.

So next time you find yourself thinking any of these things, stop and remind yourself of the damage these beliefs can cause.

It Takes Time to Get Good at Budgeting

spend less moneyA friend of ours recently approached me about helping her establish a budget. While I was glad to help, a funny thing happened:

I had a really hard time actually helping her.

I created the budget for her in the spreadsheet my husband made for us, set her numbers, called her on the phone to explain how it works and how I have my formulas set but I couldn’t answer some of her questions about actually budgeting.

I’ve been really budgeting for three years now and I’m forever learning about it.

My budget is always changing but I am very much in tune with our spending. We’re sort of on a well-controlled auto-pilot. I totally forgot what it was like to be in those initial panic-ridden days when you have this burning desire to set the budget up and just make it work.

For instance, in our budget I input all of our fixed bills like mortgage, cell phone, debt but I do not have individual lines for stuff like groceries, gas, clothes.

When I first started budgeting I did, but we’re like a well-oiled machine now. I have become so proficient at knowing our spending on stuff like groceries and gas that I transfer the same amount of money every payday to our ‘’spending’’ account. I don’t bother inputting the individual amount, rather I budget a ‘’variable/personal’’ amount which I pay to ourselves in the form of the transfer.

Once the money is in the other (spending) account I do not track every penny like I do out fixed expenses but I do monitor it closely.

This system works for us but until I had to answer questions about it I didn’t realize how personalized it was.

It has taken us years of spreadsheet making and re-making to get good. We made many mistakes and learned from them. Eventually though we got the hang of things.

To an outsider, like my friend, we look like budgeting geniuses but it was a long road to get where we are.

It’s only been the last year that we’ve become really good. Like anything, budgeting takes a lot of practice. You can download as many Excel templates and make as many chicken-scratch budgets as you want- and I fully encourage you to- but only time and intimacy with your personal spending will make you a ‘’good budgeter’’.

I am all to glad to help my friend but at the end of the day I know if she wants to get real about her spending there are a lot of stressful days in her future, spending hours in front of her computer as she stares at Excel and her online banking. I just hope she sticks it out though because the personal satisfaction, and stress relief, that comes with living on a budget is life changing.

How long did it take you to get really good at budgeting?