A big frug tip I often hear about is investing your money. I know everyone's situation is different and investing isn't a priority.
For those of you who do, can you list out steps?
I have opened an investing account with ally banking but it isn't doing much? I have gained maybe a a dollar or two.I've tried to look up guides or tips but haven't had much success. Am I missing something?
Investing as recommended frugal tip- your thoughts?
byu/Thirst_and_fire20 inFrugal
Posted by Thirst_and_fire20
9 Comments
Well, you didn’t say what you’re invested in.
Opening and funding the account is just one step and the money sits in a money market fund earning very little.
However, if you have an employer option like a 401k you should be leaning into that due to matching funds and tax advantages.
Index funds are where it’s at.
The easiest thing is to put whatever you’re fairly sure you don’t need for 3+ years into a respected, low cost index fund like VTSAX and just forget about it.
It’s better not to check on it daily or even monthly. It goes up and down, but trends well up in the long term.
Opening an account is only the first step. Like others have mentioned, you need to decide where the money in your account actually goes. In general, placing it in a mutual fund/index fund that mirrors the performance of the s&p 500 is seen as diversifying enough that you aren’t putting all your eggs in one basket but will still (historically) get a 7-10% return on your investment over (long periods of) time.
VOO is an S&P500 Index ETF that’s very popular to invest in.
ETFs are pretty hands off. You banks default settings are probably low risk low reward.
Check r/investing r/fire r/coastfire
A few things to know. 401k, with company match is a must. After that you can consider maxing it. IRA is another. HSA, another. These are types of investments where you can gain tax benefits.
There is a lot of info that I won’t go into here. Poke around in those mentioned subs and ask for advice. People will be glad to get into the weeds with you.
Auto invest in the s&p500. Simple as that.
R/bogleheads for a strategy that aligns pretty well with frugality imo
Incest in video games
Think of investing as planting a tree. You won’t see much at first, but steady contributions plus years equals real growth. Index funds are a solid place to start.