Investing 101: How to Get Started Today

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Friday, January 7, 2021

Investing 101: How to Get Started TODAY!!!

Despite the corona virus induced stock market crash in 2020, the U.S. stock markets ended that year in record fashion with the S & P 500 and the Dow both posting incredible returns. Those records seem quaint now, in light of subsequent market performance.

Since the middle of 2020, it has seemed as if the markets were weekly setting a new record for performance. These record numbers continue in 2022, naturally enticing numerous new investors to join the party and try to capitalize on this historic performance.

However, how to capitalize on this momentum and figure out the best way to get started is one of the many challenges facing new investors. Myriad choices can cause analysis paralysis, leading too many potential investors to fail to act and therefore miss out on tremendous growth opportunities.

Sheena Iyengar and Mark Lepper’s 2000 jam experiment highlights this challenge. In their now classic experiment, Iyengar and Lepper discovered that while people were more intrigued by having more choices, they were in fact 10x less likely to act with an abundance of options at their disposal. Their results are clear: whether jams or stocks, the more numerous the choices that we have, the less likely that we are to act.

Unfortunately, in the investment world, the available options for investors is staggering and will only continue to grow. Currently, there are over 40K companies globally that are publicly traded, as well as hundreds of thousands of private companies or other areas in which we can invest.

However, delaying investing can come with severe negative consequences to you. Failure to act in a timely manner can cost you, your loved ones, and the causes that you care about significantly.

Those lost gains could have been used to help pay your tuition, place a down payment on your dream home, or simply provide for the needs of your families and communities. It’s clear that more than just money is at stake!

So how do you move past such a vast array of options and prudently start investing today for your future? At Taryag, we recommend the following three simple, yet key strategies to help get you started today:

1. Start with a schedule.

2. Start small.

3. Start wide.

Start with a schedule. Set up regular intervals to automate your investment funding. For example, if you get paid every other Friday, create an automated direct debit that invests for you every other Friday. The Vanguard Group agrees that automatically recurring investments gives you the best chance to reach your goals. It’s also one less thing that you have to worry about.

Start small. Instead of planning to initially invest a significant amount of money, start with an amount that you aren’t likely to miss. 3–5% of your biweekly or monthly net income can be a good place to start. Jason Hall of the Motley Fool is a proponent of starting with $100, or even less. The key is to get started now. You can always increase the contribution to your investments in the future.

Start wide. ETFs (Exchange Traded Funds), are a basket of securities that can cover the entire market or a sector. ETFs trade, usually without any transaction fees, on an exchange just like an individual stock, making them a great idea for new investors.

Fidelity Investments lists portfolio diversification, risk management, and low costs as just some of the many benefits of ETFs for investors. For newer investors, ETFs can eliminate a lot of the anxiety that new investors have regarding trying to find the best company to invest in.

If you want to invest in the entire market, a ‘spider’ fund such as SPDR S&P 500 ETF Trust (SPY:NYSE Arca) is often a great place to start. If you want to take advantage of a particular sector, such as the airline industry you might select U.S. Global Jets ETF (JETS:NYSE Arca).

Enjoy these strategies and we wish you many happy returns in 2022 and beyond!

Thank you all for taking time from your busy schedules to read this article. For suggestions, further comments or questions, or for more information about investing, please feel free to email us at info@taryagfinancial.com or click here to contact us. (Above image courtesy of Jacob Maslow)