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You should start investing, like, yesterday. Any hesitation means you’re losing out on potential growth. You may have debt, you may be struggling to put food on the table, but what’s going to save you is going to be investing. Even if it’s just a little.
Do you even 401(k)?
If you’re lucky enough to have a job, and you’re even luckier to have a job that offers a 401(k) plan, you should take advantage of it. They’re not perfect, and some are better than others, but often your company offers you free money to take advantage of it.
This is part of your compensation, so you should do it. If you don’t, it’s like telling your boss to keep part of your paycheck because you don’t need it. So just get started with the 401(k) and worry about what to do with it later. We can help you with that, too, so check for the links below.
If you don’t have a 401(k) plan, take matters into your own hands and open an IRA. WealthSimple is my favorite option because you don’t need to save up hundreds or thousands of dollars before you start. You can start right now with even $5. Or $100. Or $20. Whatever you might be able to spare — and really try to make it work.
Because the amount doesn’t matter, especially at first. It’s just about getting in the habit.
So open an account at WealthSimple today. There are no fees while your account is less than $5,000, and as you refer friends, you’ll eliminate fees as your account grows.
As you set up your account, all you need to do is choose the investing style that fits you, and WealthSimple worries about how your money is invested. It’s a good hands-off way to invest, so you can know that your money is invested the way you want. You can take your time to learn more about index funds and choosing investments on your own, and when you’re ready, move to a different platform. But you shouldn’t hold off until you know everything about investing. The most important factor is starting early, so that’s where WealthSimple comes into play.
Get handsy with Vanguard
If you prefer a more hands-on approach, Vanguard is the next best option. You do have to save up before starting with Vanguard, though. They have account minimums, and that might make it difficult for a lot of people. So start with WealthSimple, and once your account hits $5,000 (won’t that be a nice day?), move your account to Vanguard. I like Vanguard’s “Total Stock Market Index Fund.”
Whether you invest at WealthSimple or Vanguard, you should choose a Traditional IRA if you don’t have a 401(k) or a Roth IRA if you do. That’s going to allow your money to grow without any kind of tax consequences until you retire.
The key is to just invest your money and leave it alone for 10, 20, or 30 years — or more. That’s the first type of investing you want to tackle.
So let’s say you’re a little more financially secure and you’re ready for taking some more advanced investing steps. You are contributing to your 401(k), you have an IRA, so you’re saving for retirement, but you want investments that will help you grow your net worth without having to wait for retirement. Well, now let’s look at what you should do about that, but only if you can answer yes to these questions.
- Are you taking full advantage of your 401(k) benefits? That means investing at least as much to get the full matching contribution if your job offers it.
- Are you maximizing your IRA? The government says most people are allowed to contribute up to $5,500 each year.
- Do you have a sufficient emergency fund or plan? What happens if you lose your job and can’t find a new one right away? Do you have savings that will cover your living expenses?
- Is your debt under control? You’re making progress with paying off your debt if you have any. With student loans, you’re paying at least the maximum each month, and with credit cards, you’re paying them in full every month or aggressively paying down old debt.
If you qualify, you are free to invest some of your extra money every month. It’s better than spending it, anyway. Vanguard is another good choice. But don’t fall into the trap of picking stocks or trying to predict what the “market” is going to do. You can’t beat the market, not consistently. So even for regular, non-retirement accounts, the best choice is the something like Vanguard’s Total Stock Market Index Fund, and the best place to get that is directly from Vanguard.
Don’t go to your local bank and ask about investments. They will sell you something you don’t need.
So don’t wait. Get started right now with WealthSimple or Vanguard.
More Best Investing Accounts
If you’re not satisfied with WealthSimple or Vanguard, here are some more suggestions based on our experience at Adulting.tv.
- Betterment. Betterment is another managed account like WealthSimple. It was one of the first automated managed investment accounts, and very popular with young investors who don’t want to choose their own funds, stocks, or bonds.
- Fidelity. Like Vanguard, Fidelity is a discount brokerage that offers its own index funds as well as stock trading.
- Ally Invest. Recently merged with TradeKing, Ally Invest is a discount brokerage that lets you choose your investments.
- Capital One Investing. ShareBuilder is now Capital One Investing. They have low-cost trades, so this is a great option for dabbling with the occasional stock investing (but don’t go crazy making trades!).