A common reason I hear for waiting to start investing is not having “enough” money. And this is not related to age – it can apply to everyone. The problem with this excuse is that if you wait, your definition of “enough” will likely grow, and you might never start at all. Many late investors look back and regret – they wish they had started earlier. As an independent financial advisor, so do I.
You don’t have to be rich to become an investor. A recent issue of FINRA’s Alert Advisor addresses this.
“If you start small and invest regularly, you may find that time is on your side and that you can save for the future, invest and pay down debt if you come up with a good plan—and stick to it. For those who don't think they have enough money to start investing, here are four tips to help you get started.”
1. Start with a Tax-Advantaged Retirement Account
A great place to start investing is in a company-sponsored retirement account. Even better if your employer offers a matching contribution, which is essentially free money. When you start investing, make sure you aren't leaving any free money on the table.
2. Make Investing Part of Your Lifestyle
One of the funny things about people who say they don't have enough money to invest
3. Establish an Emergency Fund
There will always be large, unexpected expenses in life, whether it is a medical bill, a flat tire, a family emergency that requires a plane ticket home or something else unexpected. An emergency fund prepares you for that inevitability and allows you to tackle the challenge without resorting to your credit card and landing yourself in a pile of high-interest debt.
4. Don't Ignore High-Interest Debt
Paying off high-interest debt such as credit card debt can be seen as an investment in its own way. You can view the money you save on interest as the return on your investment in paying it down. But not all debt is created equal. And you don't have to be entirely debt free to invest. Sometimes it can make sense to invest while still carrying some debt, such as a mortgage or student loans, which is the case for most Americans.
Source: FINRA Alert Investor: How to Invest on a Budget
You don't have to do this on your own. Unless you have expertise in finance, consider getting help from a professional advisor. An independent financial advisor will listen to your goals and help you create a financial plan to achieve them. There are various investment options, like stocks, bonds, and money market funds that can be used to build your investment portfolio. Your financial advisor should be able to explain all of this to you.
Have questions? Get in touch today!
Material discussed is meant for general illustration and/or informational purposes only, and it is not to be construed as investment, tax, or legal advice. Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary. Therefore, the information should be relied upon when coordinated with individual professional advice.