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Advice for Beginning Investors

By
Laura Adams, MBA
1-minute read

 

Quick Tip: Advice for Beginning Investors

Sometimes the hardest part about investing is just getting started. If you haven’t opened up a retirement account or a brokerage account yet, here’s what to do:

1. Decide what you’re investing for. Once you have a financial goal, it’s easy to choose the right investing account.

If you’re socking away money for retirement, use a tax-advantaged retirement account, like a 401(k), an IRA or a SEP-IRA. If you’re saving for education consider opening up a tax-favored 529 plan. If you want the most flexibility and access to your money for something like purchasing a home or starting a business, use a taxable brokerage account.

2. Determine your risk tolerance. You’re the only one who knows how you react to risk. If you don’t mind big swings in investment values in exchange for potentially high returns, you’ll want to invest most of your money in stocks or stock funds.

On the other hand, if financial rollercoasters make you too queasy, or you’re getting close to retirement, bonds and income-producing funds should make up a bigger portion of your portfolio.

3. Ask for help if you need it. If you’re not comfortable picking investments, it’s no problem! Ask for help from your benefits administrator at work or from the brokerage where you opened your IRA or taxable account.

Most investing companies offer free advice to customers. If you just want to turn your investments over to a professional, find a Registered Investment Advisor (RIA) who will manage your money for a fee based on the size of your portfolio.

Young Investor image courtesy of Shutterstock

 

About the Author

Laura Adams, MBA

Laura Adams received an MBA from the University of Florida. She's an award-winning personal finance author, speaker, and consumer advocate who is a frequent, trusted source for the national media. Money-Smart Solopreneur: A Personal Finance System for Freelancers, Entrepreneurs, and Side-Hustlers is her newest title. Laura's previous book, Debt-Free Blueprint: How to Get Out of Debt and Build a Financial Life You Love, was an Amazon #1 New Release. Do you have a money question? Call the Money Girl listener line at 302-364-0308. Your question could be featured on the show.