Growing up consists of learning new things, and somehow, we manage to relate everything back to nature. For instance, you ask your parents where babies come from and you get “the talk” about the birds and the bees. Or you have your first bad break-up and you are told there are more fish in the sea. Then you learn about the stock market and something about “bears and bulls.”
Here we seek to explain more than just bears and bulls, but a larger, overarching concept: investing.
If you don’t know about the bear and the bull, here is a quick simple explanation of it. When a stock market is trending up it’s a “bull market,” and when it is trending down it’s a “bear market.” The reason for these names refers to the animals’ attack methods; when a bear attacks, it swipes down and when a bull attacks, it rips its head upward.
People tend to associate investing with the stock market, but it doesn’t have to be. This article is especially for students or those new to investing, but really anyone can benefit from these tips. In this article, we’re going to talk about investing, saving, and some alternatives to the stock market.
Why invest?
You might be asking this fundamental question. Don’t worry, you’re not the only one, I used to ask that too. The best answer to that is one word: inflation. Investing is the best way to make sure your dollar maintains its value. The power of the dollar fluctuates frequently, and the stock market helps to make sure your dollar maintains its worth. Inflation has been a problem since the onset of currency. The stock market is a great way to combat that inflation.
In order to invest, however, you have to have a savings. Investing all you have is not a good idea, so making sure you leave your savings alone is crucial. Accidents happen, and if there were a family emergency you wouldn’t want to have to pull all your investments to pay for it.
This is a good general rule, not to put all your eggs in one basket. The stock market can be a risk-and-reward type scenario, especially when you get into more expensive stocks. I would recommend getting into stocks that have stood the test of time and have low volatility. Bitcoin, for example, is NOT one of those.
There are safer routes to go with the stock market, such as mutual funds. A big difference between regular stock and a mutual fund is, in a mutual fund, your money will be invested in several different stocks making investments much safer. You can’t do quick buying and selling in a mutual fund like you can with regular stocks.
How to begin investing
Investing is one of those buzzwords that actually has many different facets and varying levels. It can be daunting to consider if you are new to the practice, are short on money, or both. But even for students or someone else in one of these situations, investing can begin on a very simple level. Here are a few helpful apps to get you going.
Acorns
Getting into investing can be scary, so I suggest starting small until you feel a little more comfortable. A great way to do that is through the application called Acorns. Acorns takes your spare change and invests that in to portions of stocks. Be sure to go find Acorns in the Google Play Store or in the Apple App Store.
To use Acorns, you must link the app to your checking account. Whenever you make a purchase, it will round up to the nearest dollar and invest that extra change in stocks. This is a great way to see your “acorn” grow into an “oak”.
Robinhood
Another great app to help you start investing is Robinhood. Robinhood is a stockbroker but there is no trading fee, which is what will typically kill an early investor.
Robinhood is also a great way to get comfortable with investing. Thanks to the no trading fee of Robinhood, you are able to invest small amounts of money that normally you couldn’t. You can invest in stocks such as Zynga or Sirius XM that are around $3 per share. This can help you feel more comfortable with the stock market.
The other best part of Robinhood is the free stock that you can get. That’s right, free stock. All you have to do is download the app using someone else’s “invite code” and you each will get a free stock. If you don’t use the join code, however, no free stock.
If you don’t have a friend who has it already, come by the office. I’d be happy to give you my code and get a free stock.
Everyone who joins Robinhood has a chance to get stock in companies such as Ford, Apple, Sirius XM and many others. If you don’t want to invest money right away that is fine. But I still would recommend getting the app and seeing how your free stock will behave in the stock market. It will help you get the hang of the app and feel more comfortable in investing.
Other investment options
As I mentioned earlier, investing has many different personalities. It’s not all about tracking the Dow Jones Industrial Average or following brands. For students and those new to investing, there are many more ways to get returns.
Precious metals
An alternative to investing in the stock market is investing in precious metals. Some people swear by precious metals, but there is some fluctuation in the value of these precious metals. They typically tend to fluctuate due to the value of the dollar.
However, the biggest plus side to investing in precious metals is that they are tangible items you can buy. They would also come in handy for bartering in the worst case scenario of a total economic collapse. But we’re not worrying about that.
Investing in precious metals is never a bad idea, and their value tends to grow with time.
Paying off debt
The next investment is an investment with a guaranteed return. That is paying off debt. It is best said in an article by AOL, which indicates that “paying off debt can produce superior returns to most other investments…and that return is guaranteed and completely risk-free.”
Dave Ramsey is an excellent resource for managing this investment. He knows a few things about getting out of debt and can even teach you more about investing. Beehive Federal Credit is offering a Dave Ramsey Financial Peace course that anyone can access.
Real estate
Real estate, like precious metals, is a tangible investment. This is a little more difficult to invest in because it requires greater amounts of money to initially invest. However, it is also one of the more secure things to invest in. You can make a killing by buying and selling real estate at the right times. But it is always worth having.
Land, specifically, is important because no matter the real estate, it will always have to sit on land. Whether it be a residence or a business, everyone needs land.
Securities
Additionally, you can invest inU.S. Treasury Securities. You may not become the next Warren Buffet by investing in these, but it’s a great way to protect your money, particularly in times of turmoil. In the aforementioned article, AOL lists these as an alternative investment.
“Generally speaking,” the article reads, “bills carry the lowest interest rates, while bonds pay the highest, and notes are somewhere in between.”
“You can buy them through the Treasury’s portal, Treasury Direct, and hold them there as well,” the article goes on to say.
If, for example, you got a one-year treasury bill for $490 with a 2% interest, you would get $499.80 after it matured for one year. Like I said, you’re not going to get rich from this method, but it is a great way to protect your money against inflation.
Yourself
Last, but definitely not least, your best possible investment is yourself. Better yourself to be more qualified for a job or further your education to apply for the job you want. This is the best kind of investment, and it can even prove easier to know what to do.
Whatever you love to do, invest your time and energy into it. The returns that you see from your hard work will not disappoint you.