The Lazy Girl’s Guide to Investing in the Stock Market

You are a modern woman who is only concerned with making her own money and leading the way. So, of course, you are fully aware of the importance of investing. Yet, for some reason, that investment portfolio is never realized. How come? Because investing in the stock market can be intimidating. Potentially putting your hard-earned money into the wrong thing can seem like too much of a risk.

Contrary to popular opinion, however, you don’t need to be a math genius, have tens of thousands of dollars, or be a woman. Wolf of Wall Street start investing in the stock market. When done correctly, you can make a huge long-term gain and grow your wealth without having to lift a finger. This is the ultimate guide for lazy girls to invest in the stock market. Read on to find out exactly how to get started, the best ways to play it safe, and what to watch out for.

1. Decide how much you can afford to invest

The last thing you want to do is overload yourself. So, take the time to figure out how much money you can afford to invest. Calculate the total amount of your living expenses and any debt you are paying. Once you have that number, subtract it from your income to see how much remaining money you have. From there, set aside 50% for “fun” expenses (like going out to eat or shopping), 25% for savings and 25% for investments. Following this or a similar method will help keep your finances on track. Of course, you can change it if necessary.

Also, take some time to check your savings. The general rule is to have at least 3-6 months of expenses saved. But as costs and inflation rise, you may want to have a little more to rely on. That said, if you have extra money, consider putting it into your investment account. For example: If you have $ 20,000 saved and you need $ 12,000 for six months of living expenses, you could take $ 2,000 and put that into investments.

Key things to remember when deciding how much you can afford to invest:

  • Don’t get into debt for investments. Make sure you continue to pay living expenses and contribute to your emergency fund and outstanding debt.
  • You don’t need a lot of money to start investing.
  • The amount you decide will depend on your unique financial situation.
  • Investing a little is better than investing nothing at all.

2. Find out what you want to invest in

The first step is to figure out if you want to grow your wealth with a personal investment portfolio or if you want to invest for retirement. With a personal wallet, you can withdraw money that is left in your savings and contribute as much as you like to your account. You have free rein to cash out and make withdrawals from it every time. However, these withdrawals and all investment earnings will be taxed and the contributions cannot be canceled. That said, investments held for over a year are considered long-term capital gains and therefore taxed significantly less.

On the other hand, there is a limit on the amount you can contribute to a pension fund, up to $ 6k per year, or $ 7k if you’re 50 and older, and it can’t be touched until 59 and a half years old. . Early withdrawals are penalized and taxed. However, unlike personal wallets, pension funds can be a little more tax friendly. Traditional IRAs and Roth IRAs are the two most popular options, and each comes with their own tax benefits. With a traditional IRA, earnings are not taxed and contributions can be written off, but withdrawals are subject to income tax. However, earnings and withdrawals are tax free with a Roth IRA, but contributions cannot be written off.

It is important to note that unless you are day trading these investments are meant to be held for the long term. So, in theory, you can keep a personal investment portfolio for as long as you want, even until retirement. Take the time to really think about what best suits your needs and lifestyle. If you are looking to grow your wealth and have instant access to it, a personal investment portfolio may be the right move for you. A superannuation fund might work best if you want to make sure you are financially secure for the future, are self-employed or a business owner and want extra tax deductions, or prefer to pay smaller contributions over a longer period of time. Whatever you decide, just remember that there is no right or wrong option. It’s about doing what’s best for you.

Source: Piazze Sociali

3. Find a broker that works for you

Now that you understand your investment goals, it’s time to find a broker who can make them happen. There are many investment platforms out there, but there are some proven choices that are perfect for beginners.

Vanguard is ideal for those who are setting up a retirement fund because it is safe and secure with long-term, affordable investment options perfect for retirement. Furthermore, no minimum balance is required to open an account. For a personal portfolio, Robinhood has probably the most user-friendly interface available and is accessible from your computer or via the Robinhood app. Since their minimum account is $ 0, you can get started right away. They now offer 1.5% interest on the uninvested money in your account, which means you can increase your money before you start investing. Public is another option that, like Robinhood, offers a simplified interface, making it perfect for beginners. There are also no minimum account or trading fees and they also offer 2% interest on the cash in your account.

4. Make your first investment

One of the safest ways to get started is to invest in an exchange-traded fund (ETF, for short), which is essentially a basket of various stocks. This is a convenient way to get more skins in the game and diversify your portfolio. For starters, investing in an ETF that tracks the S&P 500, a stock market index that measures the overall performance of the 500 largest publicly traded companies in the United States, is your best bet. Although lone stocks can go up and down, historically the stock market as a whole has risen. An S&P 500 ETF will allow you to get a fraction of a little bit of everything while reducing volatility and risk of exposure.

SPY, VOO and IVV are the three S&P 500 ETFs. They are essentially all the same, but since all funds come with expense fees, the biggest difference between them is the cost. SPY is the most popular choice, but I personally prefer VOO because it is operated by Vanguard and is slightly cheaper and less volatile.

5. Grow your portfolio

Little does a lot with long-term investments. While your initial investment will grow on its own over time, it is vital that you continue to grow your portfolio. In addition to investing in ETFs initially, set up a system that automatically deposits a percentage (read: 25%) of your remaining money in your portfolio. From there, you can choose to add it to your current investments or expand and diversify a little more. Whatever you decide, following these tips will help you grow your wealth to its fullest potential.

Source: Karolina Grabowska | Pexel

Consider investing in a valuable stock

If you have a little extra cash, consider adding a valuable stock to your portfolio. These are less exciting titles than “trendy” ones like Gamestop and Tesla, but currently considered the backbone of the company. They are healthy, safe, conservative and consistent. When the market goes down, they tend to hold up well. Johnson & Johnson, CVS and Walmart are some examples of value stocks. They won’t drastically boost your account overnight. However, over time, they will grow your portfolio.

Use the DRIP model

ETFs, along with most value stocks, pay dividends. Dividends are amounts of money paid regularly (typically quarterly) by a company to its shareholders with the company’s profits. With the DRIP model (dividend reinvestment plan), dividends are reinvested directly into your portfolio and used to buy more shares of that dividend.

For example: If you receive a $ 20 dividend from your ETF, you can choose to automatically reinvest it in the same ETF to grow your shares. Over time, this will aggravate your investment and accumulate more shares, which will increase the dividend payout. It’s a totally free growth cycle. No matter how small your dividend is (one of mine is only $ 7 at the moment), set up a DRIP plan with your broker. It’s a guaranteed way to grow your wallet at no cost to you, so you can’t go wrong.

Avoid over-the-counter (OTC) stocks.

Over-the-counter (OTC) shares are shares that are not listed on national stock exchanges, such as the New York Stock Exchange or the Chicago Stock Exchange. This means they are unregulated and unreliable. To put it simply: they are actions of a gambler. Penny stocks are probably the most popular OTC stocks, and if you’ve seen them The Wolf of Wall Street, then you already know how dangerous they can be. Do yourself a favor and avoid OTC stocks at all costs. They are not good for long-term investments.

Remember: time in the market beats timekeeping in the market

It is not uncommon for people to talk about “buying deep”, but in the long run the market will be higher. Decide what you want to buy and get started. Time in the market always beats the timekeeping of the market. If the market goes down, you can always buy more at the bottom.

That said, it’s important to remember that the actions will move up and down, but whatever you do, don’t panic. What goes down must go up and vice versa. You won’t lose money if you don’t sell and you can’t lose if you leave it alone. The best thing to do is to follow the steps above, make similar investments over time and completely forget about them. When you return to them in the future, you will be pleasantly surprised by your little nest egg.

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