How I Started Investing

I graduated college without any real knowledge of personal finance, never mind information on how to start investing. I started working for one of the largest investment banks in the world, yet I didn’t know how to invest my how money

Prior to my first job, my financial investing knowledge was at the very best, minimum. Despite knowing about different investment products, I personally didn’t invest. Why? For starters I just didn’t know where to start. 

Finding Information on How to Start Investing for Beginners

I would do random online searches and be so overwhelmed at the hodgepodge of information available. 

I would ask myself questions like: What were all the different avenues to invest my money? Did I need to get a financial advisor? Did I have to open a personal account and start buying and selling stocks? How would I know what to invest in?  Most importantly, I had this preconceived notion that I needed a large sum of money before I could begin investing. 

For some reason, even the word “invest” itself felt expensive to me. Everyone I knew who invested did so with a lot of money. For me, it was an activity that people with money in their 30s and up did. I increasingly became overwhelmed at the sheer amount of what information I needed, where to get started, or how much money I needed.

During  My First Year of Working, I Didn’t Invest

Needless to say, just thinking of everything I had to do paralyzed me into inactivity and so for my first year working, I didn’t invest. Aside from my 401(k) from work, which gets automatically deducted from my paycheck and invested, all the money I saved would just sit idly in my savings account earning less than $0.15 (more on this to come later) in interest a month. Somehow, I decided to ask my friends if and how they invested their money.

Ask Other People How They Started Investing

I noticed that some of my friends would share information about their investment portfolios and discuss how much money they are making. This was right after the 2016 elections and the stock market was at historic highs. 

I couldn’t help but notice that in my friend group, it seemed like the men were the only ones investing. Despite being well-versed in finance, at times I was embarrassed at my lack of knowledge about personal investing. I was fearful of sounding like I had no clue what I was talking about. So I sat quietly and watched longingly, feeling unable to join in the conversation.

I eventually got enough courage to ask my friends how they invested and to my utter surprise, the vast majority used robo-advisors for their investment needs! They didn’t even personally choose what assets to invest in themselves!

Robo Advisors are Great for Beginner Investors

Robo-advisors are basically digital platforms that use algorithms to provide financial planning services. I particularly found robo-advisors to be interesting because even though I was investing, doing it through a robo-advisor meant that someone else was making the investment decisions based on my existing financial situation and future goals.  

At present, there are many different types of robo-advisors all for specific targets, some are geared towards women and their specific needs, others automatically invest your spare change, or provide access to a human advisor.

Which Robo-Advisor Did I Choose to Start Investing?

In the end, I ended up choosing Betterment. A couple of my friends already used it and could vouch for it, and I liked the fact that it had no investment minimum. Additionally, I had the option of potentially connecting to a human advisor should the need arise one day. Signing up was simple. All I had to do was download the app, sign up by answering a few questions about my financial goals, and link the account to my bank account. Just like that, by the next day, my money was being invested!

There are many well reputed robo-advisors, each suitable for a particular goal or investor. Whichever you decide to choose is up to you and will depend on your financial goals, current situation, or how much you like that particular product. Just ensure that you do the necessary research. 

How Much Money do You Need to Start Investing?

I started by investing $5000 that I had in my savings. However, most robo-advisors do not have a minimum and you can start with whatever amount you have. To my surprise (or joy, rather), I watched as my money grew daily depending on how the stock markets performed. 

Once I started tracking my account performance, I became more invested in my investments and outcomes. When I got started, it was important for me to view investing as a long term game, something that I was committing to for five, 10, 15 years. This ensured I held a holistic view and did not panic withdraw my money every time the stock market underperformed. 

How Much Interest Did I Earn During My First Year of Investing?

For the first year, I earned $400 in interest. This was beyond what I could’ve  imagined when my money used to earn CENTS in my savings account! I have automated my contribution and every month, a specific amount would automatically be added to my Betterment investing account. 

The point of stating how much interest I earned is not to tell you that this is a quick scheme to get money. Rather, it is to demonstrate how much it costs you to not take action and show how you can earn more simply by starting to invest. Regardless of how much money you initially have.

For a beginner like myself, I found robo-advisors to be the simplest way to get into the investing game. I could commit a certain amount of money, while someone more knowledgeable than me invested it. 

Always Remember That Time is Money

Much about reaping a lot of rewards from investing is all about timing. The sooner you start, the more time your investment has to grow. With the proliferation of robo-advisors, not knowing where to begin is simply not a good excuse anymore.

As for me, there was a lot that I don’t know, but you know what they say, time waits for no one! I figured it out while watching my money grow in a robo-advisor account.