I’m totally new to investing and honestly have no idea where to start. I have some savings I’d like to grow, but I don’t want to take dumb risks.
Imagine I was your sibling or cousin – what would you personally recommend for me?? Stocks, ETFs, crypto, or something else?
I want something solid, something that actually works long-term, not hype or gambling. Realistic, beginner-friendly, and the stuff you’d feel confident telling family to put their money into..
I know nothing about investing – where should I even start?
byu/ChangeNOW_Community inpersonalfinance
Posted by ChangeNOW_Community
7 Comments
Make consistent monthly contributions to low cost index funds, preferably covering the entire world. Utilize tax-advantaged space first in the appropriate amount for your retirement goal.
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“reddit personal finance how do I learn to invest?”
I would recommend reading: The Simple Path to Wealth by J. Collins.
Start with the basics: build an emergency fund first, then consider broad low-cost ETFs.
Focus on consistency and long-term investing rather than trying to pick individual stocks early.
If I was starting from the beginning, here’s what I would do:
1. Create a Roth IRA or brokerage account on Robinhood, Etrade, or Schwab.
2. Set up automatic contributions to the account.
3. Pick a few ETFs such as VOO, VONG, QQQ, SCHD on a weekly, bi-weekly, or monthly basis. You can do fractional shares on the platforms above so you buy $25 of VOO even though the share price is much higher.
4. I would do 50% VOO, 20% VONG, 20% QQQ, and 10% SCHD. If you’re young, like in your 20s, increase your QQQ exposure to like 30%. QQQ and VONG are more risk/reward and time really plays to your advantage.
5. Being consistent is the hardest part. It can be a long & boring process but eventually you’ll have that “ah ha” moment in a few years like wow look how far I’ve come. Make sure to educate yourself every so often as well. Even 1 hour per week is a great start
I’d start simple with broad index ETFs and just keep adding regularly. It’s boring but it works. Focus more on consistency and time in the market than trying to pick winners early.
The flow chart does a pretty good job, but you want to make sure you have an emergency fund first and no high interest debt second (over 7%).
Then you want to look into opening a Roth IRA with a company like Fidelity or Vanguard. Look up IRA’s for more details, but they are essentially investment accounts that grow tax free as an incentive to save for retirement. There are rules around them like income and contribution limits so read up a little first.
If you ever get a job that offers a 401k with a match you should definitely contribute to that as well.
As for what to invest into you have 3 popular options that have been proven pretty reliable for long term investing and each with pros and cons.
Target date funds: Designed to be set it and forget it. You estimate when you might retire and then select a target date fund with that year/decade. These start off aggressive which usually means more growth, but as the date approaches they automatically shift to be more conservative which trades growth for more stability. They can have slightly higher fees and because of the mix they tend to not perform as well, but still are shown to be reliable for people that just want something that works without needing to manage anything.
S&P 500 index: Index funds try to follow the market. Many people just go 100% in on this and never change. When the market is up you’re up and when it goes down you go down. Since the S&P 500 averages 10% annual growth over 30 years it is pretty reliable.
3 Fund portfolio: Boggleheads recommends this. It is heavy with index funds, but it mixes in some international index and some bonds as well. The result is a mix that doesn’t hit the highs of the index, but isn’t as volatile so you don’t see as low of lows either.
What you want to avoid are individual stocks and crypto. These are basically gambling. Don’t put any money in you can’t stand to lose.