What’s an easy way to invest if you’ve never invested before? Let’s find out!
Links from the video:
Vanguard: investor.vanguard.com/
Charles Schwab: www.schwab.com/
Fidelity: www.fidelity.com/
Investing scares many people. I get it. Every time you start researching what to do with your money, you end up on some website trying to sell you their seminar or book. Maybe investing seems like something complicated that only the smart and wealthy can do, but guess what? Investing doesn’t have to be difficult. The world of investing has been made easier and more affordable to the point where just about anyone can do it.
The investment I focus on throughout this video is the target date fund. Target date funds are designed as a simple way to own a variety of stocks and bonds. The funds start with growth in mind with investments such as stocks that are expected to increase in value. Over time, the fund will switch to bonds and other stable investments so that you won’t be as affected by a sudden economic decline.
Target date index funds typically hold some combination of stock and bond market index funds. Rather than picking and choosing individual stocks and bonds, these index funds aim to hold a little bit of all the stocks and bonds in the market. The result of this is that your portfolio is very diversified and reflects the overall strength of the economy.
Keep in mind that this investment is not a get rich quick type of investment. If you are looking for massive increases in money over a short period of time, you’ll have to look elsewhere. If you’re looking for a relatively safe investment with a stable track record, this investment is for you. So what are you waiting for?
Q&A
Which investment firm should I use?
This question is ultimately up to you to decide based on your own research and preferences. Please take some time to conduct research on all the available options.
Should I sign up for a Traditional or a Roth IRA?
A Traditional IRA is mathematically better if you contribute to it when you are at a higher tax rate than when you withdraw from it. Of course no one really knows what the tax rates will be down the road but most people generally believe that tax rates will go up in the future, meaning a Roth IRA would be better for most people.
For more information, please see to following:
www.rothira.com/traditional-i...
What are the eligibility requirements to use a Roth IRA?
This link explains it better than I could:
www.rothira.com/roth-ira-elig...
What are the benefits and drawbacks of the index vs the non-index target date funds?
Index funds follow a pre-defined market which means they tend to be more tax-efficient with lower fees than actively managed (non-index) funds. Actively managed funds involve professionals trying to outperform the index through smart investments. While some actively-managed funds outperform the market, many do not so be sure you know what you are getting into before investing in an actively-managed fund.
What stocks and bonds are in an index fund? What about target date index funds?
As their name implies, index funds follow an index which is measurement of a section of the stock market. One of the most well-known indexes is the S&P500 which is an index of the 500 largest U.S. publicly traded companies. Target date index funds tend to hold what are called “total market index funds,” which aim to invest in the entire U.S. stock and bond markets.
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