Investing can be overwhelming. There really are a lot of options, even many good ones.
How do you decide where to start?
It’s a big decision. You have cash in your hand. You know it’s there and what it’s worth. You worked hard to get it. You can feel it. You can touch it. Yet you have to let go of it in exchange something less certain. Whether the anxiety is about the investment itself or the source of the advice, it asks a lot of any rational person to give up the certain for the less-so.
That anxiety is exaggerated by one important thing I come across all the time — people don’t tell you how to do what they think you should do.
I often have questions myself, for example about running this website, and I get the answer, a correct answer, but not instructions on what to do with that answer.
I have seen the same thing in many books that want to teach you something. They share an idea, but not the prescriptive steps it takes to implement the idea.
Beginners need a prescription. A prescription eliminates the friction of starting (and I believe you should start!). Starting is the first step towards continuing, and growing. Learning more and trying even more new things.
There are many successful ways to start building wealth that you should be doing before reading any further:
- You’re maxing out your contribution to a 401K or IRA, right? This is especially important I your company makes any sort of matching contribution.
- You’re paying down credit card debt. This is a form of investing because the interest rates are costing you a lot and by paying down your balance your return is not paying that interest. Pay your credit cards down, even if it means not having a safety net.
- If you’re a parent (or grandparent!) are you putting money into a college savings plan? Probably a good idea but get better advice than I’ll give you on this one.
I found this short article about investing in the face of paying of debt while also trying to build a safety net useful.
- What are dividends?
- What does it mean to reinvest dividends?
- What are the dividend aristocrats?
- How do you get started?
- What do you measure?
These posts will help you get started with something called “dividend growth investing.” I prefer to call it “freedom.” You call it what you want. There’s nothing new, secret, or magical (well, other than the idea of compounding, the eighth wonder of the world) in these posts.Some people call this ‘dividend growth investing,’ I prefer to call it ‘FREEDOM’ Click To Tweet
The best thing about starting to build wealth these days is the low barrier to entry. You can get started for $5. That means there’s no excuse for not starting, and by starting learn something. Even if what you learn is what a big mistake that was, you’ve learned.