Are you interested in starting investing? Here are the essentials you need from the different types of investment vehicles, trading platforms, and investing strategies!
Don’t want to read? Click here to check out my YouTube video on this topic!
TYPES OF INVESTMENT VEHICLES
So what is an investment vehicle? Well, it’s really just a tool used to invest your money. Some of the most common are 401k, traditional IRA, Roth IRA, and individual investment accounts. Within each of these, you can invest in a wide range of investments from stocks, bonds, foreign exchange, options, crypto, funds, and more.
A 401k is a retirement account that is offered through a company you work for. Traditional and Roth IRAs are other retirement accounts that you would typically set up on your own. Each of these has its own benefits, particularly dealing with taxation, but they also have their downsides in that you can be penalized for taking money out early. Either way, I highly recommend contributing to a 401k if your company offers it, but only if there is a company match. Otherwise, retirement accounts can be pretty effective in building long-term wealth. If you can be disciplined enough, nowadays, you really don’t even need to invest in a retirement account.
Now that online trading is free using most brokerages, you can effectively do all the same things as a retirement account, with nominal or no fees, plus your money will be liquid and will not be subject to penalties for withdrawing early, although you will be taxed.
TRADING PLATFORMS
There are so many platforms out there that it can be a little confusing to figure out which one to choose. There’s Etrade, Fidelity, Robinhood, WeBull, Charles Schwabb, and a ton more. It seems like everybody is trying to get into the investment brokerage business.
But essentially they are all more or less the same, I use all of the ones I mentioned above for different reasons because I like to track my money based on investment type. I use Etrade for medium to long term investments, Fidelity for my 401k, Robinhood for dividend investing, Charles Schwabb for my IRA, and WeBull for my riskier investments like options trading and a bit of day trading here and there. The point is you can use any of these platforms. WeBull and Robinhood are my choices for mobile investing and as their platforms are the easiest to use, in my opinion. I have a link for each of these platforms so that if you sign up you’ll get 2 free stocks with WeBull and 1 free stock with Robinhood.
INVESTMENT STRATEGIES
So what are the best investment strategies? Well, I recommend sticking to stocks and index funds, especially when starting out. Long term investing is always the best option and consistently is proven to make you money in the long term.
The key is to continually invest in companies you believe in that make money or good index funds like the S&P 500. You can invest monthly or weekly and over time you can expect your money to grow handsomely. The average return on the S&P 500 is about 7% per year.
Day trading can get pretty risky, especially now and the issue with it is that it is a full-time job. I day traded for a little while and it, unfortunately, took over my life because I was constantly looking for the next opportunity. So it got to the point where I wasn’t letting my money work for me, I was working for my money. So for now, I’ve significantly reduced my day trading as it can be almost like gambling.
In conclusion, investing is pretty simple once you get started, it is essentially buying stocks, holding for a little while, and selling for a profit.
