Investing questions: How to get started in 6 steps

For many Americans their only financial goal of late is staying in the black.

As high as 78 percent of Americans claim to earn only enough to cover their bills every month. How do you stop spinning on the spinning hamster wheel? The first step is to look for other options for financial investment, like investing.

The process of investing isn’t too complicated. It’s just that I’m not going make it sound like a mystery and say that after reading a few articles, you’ll be able to purchase your first stock, even though you may not..

Following the rapid rise of GameStop stock two weeks ago new investors have flooded into the market hoping of earning enough cash to repay loans.

As with most major financial decisions you make in your life investing is a matter of careful thought and putting aside time to understand the basics before taking a dip into the pool of water.

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In my conversations with my colleagues who are not part of the market, one issue came up repeatedly What should I talk to for assistance?

There are plenty of sources available, but when people don’t know where to look these resources aren’t worth their weight in gold.

Dheerja Kaur, the head of the core product department at Robinhood said she was in agreement. “People think that how the resources and tools for investing are not designed specifically for their needs,” she told USA TODAY.

Robinhood has recently made waves by creating an economic disruption fueled by the individual investor who bets on stocks such as GameStop, AMC and Blackberry. Similar with Acorns, Stash and Invstr the investing apps are making investing easier for minorities, women and everyone else.

There’s a new set of investors attracted by apps, but who aren’t able to formulate a strategy of their investment portfolio. As the saying is, you don’t need to know the solution to everything there is just the need to have someone else who does.

For those who are just beginning their investment journey and considering entering the market it is ideal to talk to an experienced professional to define goals. Here are some steps you can take to get yourself to be on the right investment path:

What should I look for in a financial planner or investment adviser?

When selecting a financial advisor, it’s essential that you conduct an interview. The person you choose is responsible for managing your finances so don’t count on the appearance of their name and only choose the first choice.

“Start by asking friends and family members who you trust and respect … The field of financial management, investment planning, and planning for the future is an ad-hoc type of business,” said Monica Sipes an accredited professional in financial planning and a senior wealth advisor with Exencial Wealth Advisors.

“First consider asking how decisions regarding investments are made,” she said. “Make sure you’re comfortable with the process – it might involve an adviser on an individual basis (making these decisions) or it could be at the level of the firm or they’re outsourcing it. Ask, for instance, what the adviser or firm is paid,” she added.

If you’re still not feeling that you’ve received enough value from them, you can Try the classic interview question, “what else should I be asking you?” The answer will give you an idea of the work approach, dedication and expertise of the advisor.

“You should also make sure that the adviser is not motivated to sell you specific products and is independently-owned advisers” explained Brian Walsh, Jr., Senior Financial Advisor at Walsh & Nicholson Financial Group believes. “Fiduciaries have a legal obligation to advise only products and investments that serve the best interests for the customer.”

He advised that you should not take a quick decision, and it is important to do your homework, talk to various advisors and select the one you feel is right for you.

There are resources available to locate financial advisers for those who are the first in your immediate family or friend circle to consider taking the plunge. Sipes recommends visiting to find advisers in your area.

What investment terms should I know?

It’s also beneficial to know certain terms used in investing prior to coming across them. Here’s the terms financial advisors suggest you learn:

  • Asset allocation is a method of that balances your risk tolerance with your goals through the allocation of a portfolio’s assets.
  • Fiduciary: The person or company who acts in your name.
  • Account for brokerage: an account with a registered brokerage firm to make trades on behalf of you.
  • Retirement account: account that can be accessed following retirement (or in an emergency in certain situations).
  • An investment vehicle is the product that you invest in, e.g. bonds, certificates of deposit options, stocks or futures.
  • ETF: An exchange-traded funds is a form of security comprised of the securities of a group.
  • Mutual fund is an investment vehicle consisting of a fund taken from investors in order that invests in security
  • Registered Investment Advisor (RIA) A company or individual who offers advice to wealthy individuals on investing as well as manages portfolios of their clients


How much money should I be investing?

It’s a personal choice like most investments. However, there are important points that have been proved time and again to produce excellent results.

“At the minimum, you should save 20 percent (of your earnings),” said Sipes. “My most committed investors are saving around 40-50 percent.”

If you’re just beginning your journey making that commitment to invest that amount of money can be a stressful. Apps for investing, such as Robinhood and Acorns allow you to invest up to $1 per day with fractional shares. This is a fantastic option for people looking to familiarize themselves with the procedure. The amount you put into your account is up to you and is based on your tolerance to risk.

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“What I always tell my clients is to ensure you have at least three to six months worth of essential living costs in an emergency savings account, including savings for short-term emergencies,” said Walsh. “Make sure that you contribute to your company’s retirement plan in the event that one is available, and benefit from the match , if it is there is one available. Then, it’ll depend on the amount of net cash flow you have left each month , as well as what your goal is.”

How many stocks should I own?

Before buying stocks it is advisable for investors to think about the account and investment vehicle they use since those particulars could play an important role in the amount of stocks that are required to diversify.

“If you’re making investments in single stocks that I would not recommend unless your portfolio is built in a manner that helps you reach your objectives and objectives, just 20 stocks are sufficient,” Walsh said, noting that research has proven that having more than 20 shares in an investment portfolio “don’t necessarily mean more risk-based diversification. We construct portfolios with ETFs and funds that cost less, and generally are able to have seven to ten funds in any given portfolio. It is not necessary to go over the amount that.”

Sipes On contrary, believes that 35-50 stocks are a good way to make a diverse portfolio. “Picking particular stocks is difficult, and so when investors are starting out I recommend index funds, such as An ETF or something similar to that.”

Again, this emphasizes the importance of having a conversation with a financial planner who knows your needs and goals in the back of their minds.

In this regard, Sipes reminds us that constant effort is more important than quantity. “It’s essential to create the goal and follow through with it. This is where we’ve seen clients achieve a lot of successes,” she said.

When does my portfolio start making money?

Let me see the money, right? The most frightening aspect of investing is control and risk. As with every learning process positive reinforcement is the most effective particularly if the reinforcement is money.

“Hopefully, your portfolio starts making money right away,” said Walsh.

“When it comes to investing ensure that you take an eye on the long-term. Nobody can predict the market,” he added. “You may begin investing one day and then the market goes down 10% or rises 10%, there’s no way to know for sure.”

How does investing affect my taxes?


The investment can have no effect on your tax return or can be a big impact.

“Investing in retirement accounts, such as an IRA, a 401(k) or IRA won’t have (much) effect on tax-deferred funds,” Sipes said. “Whereas an investment of $10,000 in Tesla in the past year, which turned into $70,000 within less than 12 months could have a huge impact on the taxation of gains in the short-term that are due.”

Don’t be worried Capital gains taxes are usually managed based on the amount and time you draw the money from your accounts.

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“If you keep your positions open for more than a year, the gains will be taxed at a 15 percent or 20% the capital gain tax, based the tax bracket you are in,” Walsh explained. “If you are in the market for less than a year, the gains are taxed as normal income.”

Each person’s investment journey is different However, everyone begins by making the choice to let the money we have. The whole process can be as complex or uninvolved as you like. One thing is certain for both experienced and novice investors alike: it’s an opportunity to take a risk.

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