Intimidated by Investing? Start Here!

Recently, several people in my life have approached me with ways to make fast money. Their confidence and excitement can be contagious, making me want to jump in too. But even as a trained financial counselor I sometimes feel intimidated by what’s involved and often stick with what I know rather than try something new.

From the enticement of jumping on the Bitcoin train to claims about UTI mutual funds delivering 33% returns, how is one to decide where to invest?

First and foremost, don't impulse buy! Many lose money when they invest out of FOMO or chasing quick gains. Patience and planning are your best friends.

Key Considerations

• Purpose & Liquidity: What are you saving for? Retirement, a vacation, or a home improvement project? Your timeline matters because it determines how easily you need to access your funds (a.k.a. liquidity).
• Returns & Risk: Quickly assess your risk tolerance with this Vanguard quiz. This helps you match investments to what you can comfortably handle and anticipate in returns.
• Investment Type: Explore options that interest you. The possibilities are vast—from stocks and bonds to real estate and cryptocurrencies. Use the internet to compare historical returns over different time frames to set realistic expectations.
• Fees: Understand fees associated with each investment type. Even small fees can significantly reduce your returns over time.

Next Steps

• Open Account & Invest: Choose an account that suits your investment type. Platforms like Vanguard are great for managing index funds and other investments. Don’t forget to actually invest your money! Many make the mistake of parking cash in accounts and then wonder why it’s not growing.
• Regularly Contribute: Consistently adding money over time helps harness compound growth. Avoid frequently moving money around, which can hurt your long-term returns.

I personally avoid watching or listening to the financial news because it can cause emotional reactions to market ups and downs. If your mood depends on daily market performance, consider tuning it out. Remember, investing is about long-term growth—not quick wins. If you want quick gains, you’re thinking more like a gambler than an investor.

If you're reading this thinking: "Investing? Ha! I'm just trying to manage my day-to-day finances", I'm here to meet you where you're at if you ever wish to chat.