Screen Shot 2014-02-01 at 1.33.24 PMIt’s been less than a week since I finally took the plunge and started investing my money! It’s something I’ve been wanting to do but wasn’t able to get to last year. There’s the fear of losing my money and also investing has always been thought of as something that’s extremely complicated and tricky. The great thing is that there is a surge in making personal finance a lot easier to understand and do in the last few years. There are tools to help manage your budgets, track your spending, and now there are tools to make investments easy and simple.

I’m trying out a company called Betterment that allows people to invest without a lot of money and does all the work for you. Don’t need to research a ton of stocks and funds to decide which ones you can most safely invest in. It has a beautiful interface that’s pleasing to the eye and opening an account is pretty fast! It just took a few steps and now I’m an investor!

1. Sign up for an account
2. Link your checking account to Betterment, this can take a few days because they need to verify the account is actually yours of course!
3. Once the checking account is verified you can start transferring money!
4. Set up an automatic deposit of at least $100 per month in order to make sure you get the lowest fees possible.
5. Watch your money make more money for you!

The way Betterment works is that they charge a small fee based on the percentage of money you have invested in your account. For under $10,000 the fee is .35% of your investments. They have a selection of funds that they invest your money into. Your money is spread across all these funds to minimize risk. You set the percentage of stocks vs bonds you want so you can be conservative or more aggressive in your investments. They also have tools to help you reach a goal. If at anytime you wish to take money out it takes a few days to process and it goes back into your checking account. That’s all there is to it basically!

Investing definitely has its risks because nothing is insured and if you lose money then you lose money. To actually make money the majority of your funds will be in stocks with a small percentage in bonds. This means you’ll be at the mercy of the stock market and how well the economy is doing. Same thing as your retirement funds but without the benefits of not having to pay taxes on the profits until you start taking payments (of course this doesn’t apply to roth ira accounts). I’m not investing short term though and am planning on having these compound for years.

It’s a bit scary to think that I could lose money on this, but overall stocks usually go up if you go in for the long term. Our retirement accounts are all linked to the stock market also and during the beginning of the recession those accounts plummeted. They are meant to be long term though and since then they’ve gained back what they lost and more. I wouldn’t invest in individual stocks because it’s much too risky and I don’t have the knowledge. Investing in funds is a much safer option and being able to spread it across many funds is even safer.

If investing is something you’re interested in then Betterment is a good option to get started. This is something I’m doing in conjunction with savings though to spread out my assets. I’m following the traditional finance advice of not keeping all my eggs in one basket. I’m doing this so that I can make my money work for me and have some income in the future that I can touch. My retirement accounts are for when I retire, savings are for things I need in the next few years, and investments are something for the next 5 or 10 years from now.

Here’s the link in case you want to check it out!
Betterment

How do you make your money work for you?


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