Investing can be difficult if you don’t educate yourself first!
Do you know your current income expenses on a weekly monthly level? I did this for about 2 weeks and saw I could save money by cutting simple expenses… It is a wakeup call and if you consistently spend without knowing how much you need to save to invest, you are hoping you get results without no process.
When investing, play for the long term. Understand what a good return is.
Educate yourself on the investment platform before investing. Why are you picking this over ever other investment?
Decide how much you want to invest… do you plan on diversifying and having a portfolio? Or just have a niche and put it all in stocks/real estate/etfs.
Do you plan on putting monthly money in the investment to grow it? Reinvest the dividends?
Overall, study the investment and execute. There are three recommendations I would have for a new investor.
- Roth IRA- I opened an account thru vanguard. The great thing is this can be done in ten minutes! You are able to put in 5500 a year… The tough thing is you can pull out your profits and earnings tax free when you’re 59.5. Thats a waiting game! But, you will pay no tax on years of compound interest…. If you want money that is liquid (you can take out when you need it you want to put into Index Funds)
- Index Funds- Again Vanguard! I have a very simple 3 fund portfolio. I started investing here just after I turned 22. Fairly Passive. I just put money into it bi weekly as well as reinvest the dividends.
- Real Estate. This is the one that I waited the longest to invest in. Also, the most upfront knowledge needed as well. If you are young, you may be able to house hack a duplex, triplex, or fourplex and live close to free! With an FHA loan you can put only 3.5% down! Leverage is key here. If you are young, and able to use the owner occupied FHA loan, definitely look into house hacking for a first investment. Also, it gives you exposure to see if you like being a landlord.. Worst case, if you factor in property management- you should still cash flow with a PM
Again, these are the only 3 I am involved with. There are countless ways to make $. With limited capital, I would start with Roth. Next Index, finally real estate.
At the end of the day, if you are educated on your investment vehicle, you will understand you will have great months, as well as slow months…. I reinvest the dividends (this is your choice as well). It will take time to learn how you plan on investing. Make sure you do your due diligence so you know what you are getting into!
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