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Investing Tips I Wish I Knew in my Twenties

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Brooke Joly Article 2

I started investing at age 22, long before I thought it was cool.  But back then, I didn’t even realize I was investing at all.

The second I opened up a company 401K at my first job out of college, I became an investor. What’s strange is that it took me years to recognize it.  

For so long, the term “investor” has been synonymous with a profession. We’re talking bankers, Wall Street investors, and the people on the New York Stock Exchange who throw money around like it’s a game of Monopoly. This image of the professional investor made me think that the average person wouldn’t understand the complexities of investing, especially me, at such a young age!

I genuinely believe that we fear that which we do not understand. By educating myself about the best practices of investing, it became far more accessible than many make it seem. Not only did investing become much less scary, but it was even kind of fun.

If I had known in my twenties what I know today, I genuinely believe I would be looking at a very different financial reality. So I’m sharing these tips in hopes that they help you to go forth and conquer without fear, as I wish I had done.

Everyone can be an investor.

You may not be aware of it, (I know I wasn’t), but you’re likely already an investor. If you have a company 401K, a Robinhood or Acorns account, or own any stock; you are an investor. The term investor simply means that you choose to put your money into financial vehicles that will hopefully grow your investment into more money and profits. That’s not too scary, is it?

The day you accept your seat at the table as an investor is extremely empowering. It can be the difference in feeling out of control or in control of your financial future. Do your part to inform yourself about investment options and remember that the only person who will set aside money for your future is you.

Investing is only as complex as you make it.

Once I got comfortable with the idea that I was an investor, and began to choose investments for myself, I spent way too much time on it and was overthinking every move I made with my money. The rise of the ability to be an iPhone investor means some companies are trying to make it easy for us. Try not to let the abundance of information keep you from getting started. If you’re still feeling uncertain, it may be best to consult with a financial professional, (and not just random people on YouTube).

Only in recent years have we seen the rise of exchange-traded funds (ETFs). ETFs typically track an index and allow us to not put all of our eggs in the basket of a single large corporation, but to diversify in many companies across a particular industry or multiple industries. ETFs have also been said to perform better than actively managed funds over time. These funds can be an excellent choice for new investors as they are typically low-fee and easy to understand. I choose to put my investments in ETFs for these reasons.

Investing doesn’t require constant attention.

Many of the images that come to mind about investing are of day traders: the kind of guys in movies like The Big Short or Wolf of Wall Street. The difference between the average person and these figures is that they eat, live, and breathe the stock market and investments. For you and I, we can develop a strategy of investing that is very much set it and forget it.

Once I decided which investment vehicles I wanted to use and the amount I wanted to invest each month, I set the cruise control (automatic investments) and went about my life. I check my balances every few months to be sure nothing crazy has happened and that my contributions are being made, but I don’t stress over it.  Most investments are going to be for the long term, so keep that in mind, develop a strategy, and keep on keeping on.

No good comes from trying to time the market.

Especially in recent months, you’ve probably heard people mention “buying on the dip” or expressing a desire to “get in while the market is down.” Speculating on what the market may or may not do will do nothing more than cause you to lose your sanity.

Monitoring your accounts and rebalancing on an annual or semi-annual basis is an excellent idea. Checking your accounts every day and trying to move money to time the market will drive you crazy, and will likely end up being a poor decision for your portfolio. Investors that try and time the market often end up missing out on potential gains over time because they’re too busy looking for a profit today.

Keep an eye on all of your assets.

It’s relatively common for people to leave a job and completely forget about an ex-employer 401K or 457 account with a few thousand dollars in it. I left a company at 25 years old and didn’t end up transferring the balance of my 401K until I was 28. Leaving these small sums of money to sit over time could be preventing you from potential gains, like the three years I lost.

It’s best to keep track of all of your investments in whatever way is most natural to keep you organized. I am a fan of spreadsheets, but I know those make some people cringe. Having all of your investments in one place will not only make it easier to view your net worth (a comprehensive look at all of your assets minus liabilities). But it can also alert you to areas in which you may have overlapping investments and may need to consider diversification.

Taking an active interest in your finances doesn’t make you a nerd.

Taking control of your finances is actually one of the coolest things you can do. What’s cool is financial security, stability, and freedom. What’s cool is not having to worry about money and being able to do what you want, when you want to do it. So take the time to understand your investments and develop a strategy. If people want to call that nerdy, so be it. At least you and I will be together basking in the nerdy glory of financial freedom and long-term wealth.

The overarching theme of these tips is that investing doesn’t have to be scary. Each of us should feel empowered to understand how to make our money work for us. Your financial future depends on your ability to cut through the preconceived notions and establish yourself as a money manager for your household. Take charge, seek out information, ask for help, but never let the lie that investing isn’t for everyone hold you back.

Contributor’s opinions are their own. Always do your own due diligence before investing.

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