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When Should You Start Investing?

When Should You Start Investing?

Isn’t that the question of the day? Investing should be top of mind, giving you a sense of financial security in the long run. 


What are your long-term financial goals, or what do you want to invest your money for? There are countless answers. The majority may respond with retirement. Some may say education.


Investing in your future is surely something everything should do, but the question could be altered to ask, “Am I ready to start investing?”

What Does It Mean To Be Ready to Invest?

Investing starts at any age. So it’s best to say that you should begin building your wealth as early as possible. 


Can you just take your net paycheck and deposit it into an investment account? Of course - it’s your money, so you can do what you will. Is it recommended?


Before you begin to invest, we encourage you to follow the prerequisites. Investing in your future is the ultimate goal, but saving for today is where we would like to commence.

Remove Debt From the Equation

Debt is a rival to investments. Unfortunately, it too takes advantage of compound interest. The difference is that you aren’t earning money; your debtors are.


Your goal at the end of the day is to invest money that is considered free. It can’t be labeled this way when debt is involved. Focus on paying down credit card debt or any debt associated with a 6% or greater interest rate. 


This gets you closer to financial freedom and to the power of investing.

Be Prepared With an Emergency Fund

Are you well equipped should an unforeseen event or expense knock on your door? Consider the pandemic and its impact on the world as many people were furloughed or, worse, laid off without a rainy day fund to rescue them.


In 2021, BankRate performed a survey showing that 25% of people in the United States do not have an emergency fund, whereas the remaining 75% carry anywhere from approximately three months to greater than six months in their savings. Are you one of the 25% percent?


Rank a well-stocked emergency fund on your priority list before dipping into your funds to invest. 

Saving is geared for the short-term, whereas investing is for the long-term


Once you place your money into an investment, it’s likely to be locked in and more difficult to access when needed than a savings account. And during an emergency, you’ll need to have your money at the click of the button.

How Much Should You Prepare To Invest?

Met the recommended prerequisites? Perfect! Now, let’s prepare to invest.


Experts recommend that 10% - 15% of your income is contributed to an investment regularly for the best growth results. Does this work for you? Let’s take a closer look at your budget to find out.

Tips To Include When Building Your Budget for Investing

Pull out your budget and assess it. How does it look when including investment contributions? 


If your bottom line is short, hone in a little more on your expenses. Ask yourself, is there anything you can cut out that is nice versus a necessity or must have? 


Here are a few examples:

  • Remove trips to the coffee shop. Cups of coffee may appear harmless, but they still decrease your net income. Invest it instead. For example, put it towards a subscription to purchase gold instead. Now that’s a tangible asset with a lot more value than a coffee!
  • Check for auto-renewals and subscriptions that are not being used. It’s easy to enroll in several different streaming channels, as an example. But do you watch them all? Or are you using all of the services you are paying for? Assess this and cut out the ones you no longer need to increase the money in your pocket available for investing.
  • Substitute brands when shopping. Can you lower your grocery bill by using a store brand versus a name brand? Or do you have to buy Versace when comparable clothing options are available? Weigh the scale and train your mind to shop smart.

What Should You Invest In?

  • 401(k)
  • Individual Retirement Account (IRA)
  • Gold

It is time to put your money to work. 

401(k)

Work for an employer, or self-employed? A 401(k) is your first target, especially when working for a company that offers a matching contribution! Your contributions are tax-free, so you won’t have to stress about paying taxes until the time of withdrawal.


Experts recommend that your contributions match that of your employers. This means that if your employer matches up to 4%, copy it! In 2022, the max contribution amount increases to $20,500, so take advantage of the new year and grow your investment.


You know the saying out of sight, out of mind? Let the 401(k) work in your favor, building growth over time while you just set the foundation. 


Your employer, with permission, can auto-deduct your contribution so that you are paying consistently and never making an excuse to need the money for something else.

Individual Retirement Account (IRA)

There are two types of IRAs:

  • Traditional IRA
  • Roth IRA

Traditional IRAs accumulate with after-tax contributions, whereas Roth IRAs work similarly to that of a 401(k) in that contributions are pre-tax. Both have a max annual contribution of $6,000, so it boils down to your preference to tax. 


Bear in mind your overall goal is to invest 15% of your income. A 401(k) may not solely check that box, which means you’ll want to make it up with an IRA or another type of investment account.

Have You Thought About Investing In Gold?

Gold is a fantastic compliment to an investment portfolio. It’s a rare commodity that maintains its value, even during inflation. It can also be purchased in various ways. 


This means that you don’t necessarily have to find an area in your home to house gold bars, coins, or bullion. 


Here are additional options on how you can invest in gold:

  • Exchange-Traded Funds (ETFs)
  • Mutual Funds
  • Futures Contracts
  • Stock (Mining companies)

Diversifying your investment portfolio with commodities such as gold or other precious metals is an option to research and explore for your financial future. 

How To Invest Once You Are Ready

  • Option 1: Take control and make decisions for every move you make in your investments. 
  • Option 2: Hire an investment professional.

Investment professionals are at your service and can help get you started. That’s very vague, though, huh? There are a lot of investment professionals to choose from! 


We won’t make recommendations on who to choose, but we will give you some pointers.

Ask Around and Do Your Research

Have relatives or friends that invest and can’t stop boasting about their financial advisor? If so, start there, but don’t feel obligated to choose who they work with. Treat your search like you would if looking for a job. You want to check off items on your list, such as their reputation or length of time in the business. 


Set up time and interview the potential candidates. Find the one that has your best interests first and aligns with your long-term financial goals. Only then can the start of a beautiful investment friendship take flight.


Not sure of what you should ask? Think along the lines of:

  • Licensing - what type(s) of professional licenses does the person or company hold?
  • Are there any hidden fees?
  • What is the minimum contribution required to open and maintain the account?
  • Do they receive a commission or a flat fee for managing the account? At what percentage is this calculated?
  • What type of investments are offered, and why were they selected?
  • Are they registered with FINRA? The SEC? Or a state securities regulator?

Investing Begins Now

There is no set age to begin to invest, but focus on investing as soon as possible! Get your finances in order and prepare your mental state. As soon as you have the extra cash, plant it, water it, and allow it to grow over time. The latest and greatest television, brand new vehicle, etc., can wait.


Are you thinking about diversifying your investment portfolio? Gold is a great option and a hedge against inflation due to its ability to retain its value.


If you are searching for an affordable method of purchase that is delivered straight to your door, we invite you to browse the latest and greatest subscription options offered by AcreGold. 


Visit AcreGold today for your gold purchase. Begin building your growth while having the highest quality gold in your possession.



Sources:

Where Do I Start? | FINRA.org

Survey: More Than Half Of Americans Couldn't Cover Three Months of Expenses With Emergency Savings | Bankrate

Pay down debt vs. invest | How to choose | Fidelity

How to Start Investing: A Beginner's Guide | RamseySolutions.com