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Have a Smart Start With Investing your Finances

Posted December 26, 2012 by Amarendra to Finance 0 0
This post was written by a EasyFinance.com Community member. The views expressed below may not reflect the views of EasyFinance.com.

In these trying times, it seems investing is only reserved for those with a steady financial source. That may be true; in fact, statistics show most people’s income is not enough to meet their ultimate financial goals (most resort to loans, txtloans, etc). But this does not mean anyone couldn’t start on saving money and opening investments. Anyone can get started; all they need to know are the smart ways on how to start investing.

Get Started with the Basics

Basics are always a must in everything, including investments. How? You can start launching an emergency fund and a retirement plan. Small scale investors or those just starting up are often caught in a frustrating situation. They have lots of goals but with no financial means to achieve them. Making this worse are investment companies that only pay attention to those with assets in thousands than those with just hundreds. Well let us not blame them also, as small accounts may not suffice the broker’s basic needs and may not even cover the costs of mailing.

The good news is that there are strategies that can give you a good head start, help you achieve your goals one at a time, and guide you towards the good path of investment. The first two things you need to do are to have an emergency account (gives you a sense of security in case a financial upset happens) and a retirement account.

On Retirement Accounts

If you have an access to an employer or a Roth IRA, then don’t let your retirement plan wait (provided they have a 401(k) plan offering matching contributions.  The contributions for a 401(k) r a similar plan are taken before the taxes; this decreases the amount of tax you have to pay, increasing your chance of saving. A lot of employers also match contributions to a rate of ₵25-100 on the dollar which amps up your returns.

Both plans also allow penalties and free access to some parts of the savings, given it would be accessed during the right circumstances. This means you can access some of the savings to finance short term goals such as college education or buying a house. You also don’t need to pay tax on investment earnings so the money grows fast.

On Emergency Accounts

The emergency account provides you a financial source in case things go haywire (this prevents you from moving back in with your parents). When the emergency account is well established, set aside 10% of your income to your retirement plan (don’t worry if the amount is small, the important thing is it will give you a head start). If you marry, chances are that the emergency needs would change, but it would not double. If both of you have emergency funds, you can pull out some of the money for reinvestment to meet long term, joint goals.

Where to Invest Then?

Once the two basics are set, you can now go on and buy individual stocks. The two best bets are TD Ameritrade and Sharebuilder. The two are fit for small accounts; with Sharebuilder, you can exchange traded funds and buy individual stocks for as little as $4. There are no investment minimums, with TD Ameritrade, trades are charged $9.99 and it lets investors buy more than 100 ETFs with no commissions.

You can also try motif investing which allows you to buy stocks or baskets following a single theme; example companies that cater to pet care or those that work on biotechnology breakthroughs. You can invest for as little as $250.


About Amarendra: The author of this article is Mariette Johnson, writer of online articles on business, finances, loans and the like. He recommends txtloan.co.uk for text loans and he particularly writes articles guiding readers on investments and how to get started on investing.

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