If I Had $500 to Start Investing, Here's What I'd Do
So you've got $500, and you're ready to start investing. But HOW exactly do you do that?
We so often hear about investing this, and investing that, and how investing is important for passive income and it'll get us so much further than just saving money in a bank account will...
But when it comes time to actually do it? Let me be the first to say: it can be CONFUSING.
Finance has its own language, and its own jargon, and, if you're not familiar with it, it might as well be Greek. (unless you speak Greek... in which case, I'd love to know: how'd you learn Greek?)
So, if you're a new investor, you've come to the right place, because today we're talking about the step-by-step action plan I'd take if I had $500 to start investing - in plain English.
No inexplicable fancy terms. No fluff. Just a plan. We'll cover the 5 types of income-generating assets (and the easiest one to get started with), how to increase your chances for success, and the #1 way to make sure you’re successful in the long run.
So let's dive into my top tips on how to get started investing as a beginner, how to set yourself up for long-term financial success, and why automation is your new best friend.
5 TYPES OF ASSETS
Paper Assets - think: the stock market
Commodities - think: physical naturally-occurring resources such as precious metals (like gold and silver) and food (like grain and coffee)
Business - as in, starting your own gig
Real Estate - buying a house, a condo, a duplex, etc.
Cryptocurrency - like Bitcoin, Ethereum, and others
WHAT I'D DO
As someone who’s invested in all 5 of these asset classes, I can say without a shadow of a doubt that if I had $500 to start investing, I’d use it to invest in the stock market. But I wouldn’t invest it in the stock market on my own...
I don’t know about you, but I don’t have the time, interest, experience, or knowledge to research companies, their leadership, their plans for coming years, their ethics, their revenue, their expenses, their profits and losses… You get the picture.
In other words, I don’t have the time, interest, or experience to dig deep into different companies to decide which shares I should buy to make money on my investment.
Some people are experts in this field who do this every day for a living. These people are human beings and they don’t have a crystal ball that will tell them where to invest my money, but I think they’ve got a better chance at success than I do — so I like to use them.
And, specifically, I’d look for a fiduciary.
A FANCY FINANCE WORD YOU SHOULD KNOW
A fiduciary is someone who is both ETHICALLY and LEGALLY obligated to act in your best interest, even when — especially when — that means putting your interests ahead of their own.
I’d suggest comparing 3 platforms (fiduciaries) and looking at different aspects that matter most to you to decide on which one you'd like to try.
If you're not sure which aspects to compare, hit play on the episode to hear how I selected my fiduciaries.
DON'T LEAVE WITHOUT DOING THIS
I don’t want to close without telling you the #1 way to make sure you’re successful in the long run.
Some people master the magic of passive income much faster than others... And do you know the #1 thing that sets them apart? It’s that they KEEP. ON. INVESTING.
Don’t just invest your $500 one time, and then never invest again (although, let me tell you, investing that $500 is so much better than investing nothing at all).
Here is where automation will become your best friend and - take it from me - it will MAKE OR BREAK your money strategy. If I had $500 to start investing, I’d take all the steps I just shared with you but I would not stop there. I would not stop until I’d successfully set up a monthly auto-deposit from my bank to my fiduciary.
And I’d make sure it was AS MUCH AS POSSIBLE because the faster you can grow the base amount of your investments, the faster the growth potential is. This is what I’ve done for years, and it’s served me well.
I calculate how much I can afford to invest monthly – the ABSOLUTE MAXIMUM – and I set up an auto-deposit so that I make 100% sure it happens. Every. Single. Month. Seriously, DO NOT SKIP this step. You’ll be forever grateful you didn’t.
START INVESTING NOW
Want to know which fiduciaries I use to invest, and how I selected them?
Then you'll want to press play on this episode for even more insight into smart investing for beginners, to learn what you and I have in common, and to hear a simple definition that will change how you think about every single purchase you make from here on out (in a good way!).
And, most importantly, be sure you calculate the maximum amount of money possible you can afford to auto-deposit into your investments.
I’ve created a free PDF one-time budget calculator (or if you're serious, you can get the one I use, the reusable monthly budget calculator and financial dashboard) that takes into account how much money you make and all your monthly expenses so you can quickly and easily see how much you have left over each month to put toward your auto-deposit.
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