The phrase ‘investment tricks’ might make you worry something shady is going on. Or you might think investing is only for rich people.
You’d be wrong on both counts. But you’re not alone. Nearly 80% of millennials don’t invest in the stock market.
But you’re missing out. Even if you’re not a millionaire, you can still get the benefits of investing.
Pair investments with making money online that you’re already doing. Get off to a good start towards your nest egg.
Now read on if you want to know which investment tricks can set you on the right path.
Each journey starts with the first step
It might sound cliché, but it’s true. You can’t go anywhere if you don’t actually take that first step.
But taking any kind of step with money can feel scary. Isn’t it risky?
Anything’s risky – but once you get started, you’ll realize investing isn’t any more difficult than learning to drive.
But some investment tricks rely on easy wins to get you started. Consider your company 401(k).
If your employer sponsors the plans, then they might match your contributions.
That just means that they’ll match a portion of every dollar you save towards retirement.
It’s one of the easiest investment tricks to get you going. Some people pass up the opportunity because they don’t want to lose more money from your paycheck.
But you have to think long term. You might not have it right now, but you’ll have it in a few years’ time. You’ll actually have more!
So why would you invest more?
Think of it as the story of the ants and the grasshopper.
The ants spend all summer storing food for the winter. The grasshopper eats what it needs and dances the summer away.
When winter arrives, the grasshopper has nothing to eat. The ants are totally prepared.
Investors are like the ants. They put their money in things that can offer returns further down the line. It’s all about delayed gratification – on a major scale.
But the investment tricks don’t stop at a 401(k)
A 401(k) nest egg is a brilliant start. But there are other things you can do too.
There are two types of investment worth considering. First of all, there’s investment in yourself.
That might mean going back to school. Maybe you need more certifications for what you do.
You spend money in the short term so you’re worth more to employers in the long term.
While you’re saving to pay for your education, try these 9 real life hacks rich people use to manage their money.
You can also invest in things.
The 401(k) got you going, so now you can move on to stocks and bonds.
The stock market makes people think of gambling. But you’re not gambling. You’re investing.
The difference lies in the fact that investing requires educated decisions.
So the next investment tricks ask you to do your research. You need to invest in the best stocks that match your goals – and then leave it alone.
Want to make short term profits? Don’t invest more than you can afford to lose.
So which investment platform will you choose?
- Online stock brokers (often cheaper than face-to-face meetings)
- Financial advisors (great if you don’t mind paying for someone else to handle your money)
- Robo-advisors (imagine the ease of an online broker and the benefits of a financial advisor)
- Investment apps (easy and automated, and you can invest right from your phone)
- Direct mutual fund accounts (buy mutual funds direct, and save paying broker fees)
- Dividend reinvestment programs (buy stock direct from a large company, saving brokerage fees)
The platform you choose will depend on your financial goals.
Online brokers or direct mutual fund accounts are great places to start. There’s less risk and you can learn how investment works.
But then a robo-advisor can be a ‘plug-in-and-play’ option if you want to keep it simple. Deposit money, choose your risk tolerance and let it choose the investments for you.
The quickest and easy option are investment apps, and you need as little as $5 to get going. 45% of millennials are more interested in investments than they were 5 years ago. Apps certainly make that a lot easier.
While you’re getting used to investing, stick to mutual funds. You get a diverse portfolio of stocks and bonds, making it a safer investment.
But you’re buying a single ‘bundle’ rather than individual investments. It’ll make your investments cheaper overall.
Thinking about a retirement account?
You’ve got two options. The individual retirement account (IRA) and the general taxable account.
The IRA wants to give you an incentive to save towards retirement. It wants to rewards the ants.
So you’ll get certain tax advantages.
However, you’ll have limits on when you can make withdrawals. And you’ll have limits on how many contributions you can make per year.
Within the IRA you have three types of accounts. The most common is the traditional IRA.
The biggest advantage is that you may qualify for tax return deductions based on your contributions.
That said, you do pay tax on them, although you may be able to defer tax until you start making withdrawals.
By the time you retire, you’ll probably have dropped into a lower tax bracket anyway. So deferring the taxes should save you some money.
You could go for a Roth IRA which takes contributions after tax. The money grows tax-free, and you don’t pay tax when you start making withdrawals (conditions attached).
This is probably your best option as a new investor. It carries the least risk and has the biggest potential rewards.
And there’s your final option – the Rollover IRA.
Put simply, you might have a 401(k) with an employer. When you leave, you can roll the money into one of these accounts.
You don’t have to do it all at once
With all of this information at your fingertips, investment can seem daunting.
But remember our opening point. You just need to take that first step.
For you, that might mean signing up for your company 401(k). Maybe you want to open a Roth IRA.
Or maybe you want to download an investment app and start investing small amounts into stocks.
And remember, you can always change things at a later date if they’re not working.
Just choose one of these investment tricks to start with. See how you get on.
You can pick up more investments the further along your journey you get!
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