Ready to Invest? Here’s Where to Get Started

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Ready to Invest? Here’s Where to Get Started

You’ve probably seen powerful, high-profile investors and wondered “where did they get all of that money?” Well, even the biggest fish had to start somewhere. Some are born with it, but many others started out right where you are now.

Everyone will agree that it’s best to start building your profile as soon as possible. After all, you have to dip your toe into the water before you can become a shark. So, let’s assume that you’ve managed to scrape together $1,000…here’s what many of the savviest investors recommend you do with that capital.

First of All…Don’t Overextend Yourself

Remember that investments take time to pay-off…that’s what makes them investments. You don’t want to pour all your available capital into an investment, so before you put a penny into any opportunity, you should be sure that you have a rainy-day fund.

Your rainy-day fund is your stopgap for protecting against a sudden expense, like a car repair or medical bill. It’s more important to have enough liquid cash to cover an emergency than to have an expansive investment portfolio. This is especially true because, after all, an investment is a risk, and the operative rule is to never invest more than you’re comfortable losing.

If you still have that extra cash available after ensuring that you have enough in your rainy-day fund to cover a sudden expense, then check out some of these options:

Exchange-Traded Funds

Exchange-traded funds, or ETFs, are a very popular option for new investors.

An ETF is like a mutual fund, in that it holds a basket of assets including shares of stock, bonds, commodities like gold or oil, or foreign currency. Shares of that basket of assets are then divided up among investors in the ETF, spreading the risk among many different partners and assets. Unlike mutual funds, though, shares in an ETF are bought and sold over the course of the day, which will cause the price to change.

ETFs provide a broad asset-class exposure, so even if the price of one stock or commodity in the basket drops, the ETF won’t be substantially impacted. This makes it a good option for accruing stable dividends without a large up-front investment. You can even buy shares in multiple different ETFs with different portfolios of assets. The Stash app is a simple and straightforward way to get involved in ETFs.

Mutual Funds

A mutual fund takes that same principle of pooling many different investors’ funds to insulate against risk. Unlike ETFs, though, most mutual funds require a larger up-front investment, typically around $1,000, accompanied by regular minimum deposits.

Mutual funds are considered a very long-term investment. They allow shareholders to sock-away a little money at a time over years and years and let it grow, plus, mutual fund returns are usually a bit more stable that ETFs. This makes them a very popular option among those planning for retirement several decades ahead of time.

That said, mutual funds will not produce substantial returns in the short term, so they’re not a great option if you’re looking for big, flashy investment opportunities.

What If I Want to Go Big?

As mentioned above, investments like ETFs and mutual funds are very safe options that will produce long-term returns. This is a smart idea for the bulk of your money, but you may be interested in exploring some of those higher-risk, higher-reward options as well with those last few dollars:

  • Cryptocurrency: The market for cryptocurrencies like Bitcoin and Ethereum is extremely volatile, so there’s potential for immense profit…and loss. It’s not a good bet for the long-term, but the blockchain technology behind these coins may be worth exploring.
  • Startup Funding: You don’t have to be a big-name VC to get into startup funding. Sites like allow small-time investors to build a portfolio of early-stage investments through larger investment syndicates.
  • Currency Trading: Currency trading can be a very complicated task given the quick-paced changes in exchange rates. It is not recommended for beginning investors, but storing a reserve of value in a stable currency can be good insurance against adverse economic conditions.