Getting Started as a Beginner Investor

[00:00:00] Eric Brotman: Welcome to Don’t Retire, Graduate, the podcast that asks you what you want to be when you grow up so you can graduate into retirement with purpose and passion. I’m your host in valedictorian, Eric Brotman. Welcome to Office Hours where we answer listeners questions about personal finance, retirement readiness, and more. We received a question from Tony who asked, “What’s the easiest way for a beginner investor to get started?” Tony, it’s a great question. And you know, the first step of any journey is always the most difficult, whether it’s investing or climbing a mountain. I would tell you that the, the first thing to do is to begin to educate yourself, and that means some personal financial literacy programs. Depending on your age, if you’re a student there may be programs at your university or even if you’re younger than that you can use Junior Achievement or one of the other programs that’s out there that are nonprofits where you can do some, some learning on personal financial literacy. There are also programs that we’ve put out@bfguniversity.com to help with basics of personal financial literacy. And specifically on the investor front, I think the first thing to do is to determine the purpose of the investing that you want to do. Is this a retirement account? Is it an account where you, you just wanna learn some of the basics and maybe take your lumps a little bit? Investing like anything else is, is something you have to practice and get good at. Depending on your level of of wealth, is this something where you’re gonna need some advice or is this something you wanna do on your own? If you need advice as a beginner, there are lots of robo advisors and other platforms where you can get some, some help some algorithms and some, and some questionnaires that will help you choose something appropriate for you from an investment standpoint. And I think that’s a very valuable way to start. Eventually you may graduate to the point where you’re looking for a financial advisor or somebody to shepherd you through that process and be an advocate for you. But if you’re just starting out, you may not need to go to that expense or that trouble. You may just want to use one of the major firms and their, and their websites and their robo advisors to do this with you. So the first thing I would do is say: get some education. Learn some of the basics so that you’re reasonably armed for that conversation, whether it’s something you’re interacting with online or whether it’s a phone call with a call center. The second thing I would say is: avoid the, the hot dot, the hot items, the meme stocks and the things that you’re seeing on, on Reddit and, and around the social media. Those are third rails. And unfortunately what happens with those kinds of things is a very small number of people make a very large amount of money and a very large number of people lose everything. And that is not investing, it’s gambling, it’s speculation, and I beg you at any stage of your financial life to avoid doing that. Next thing I would tell you about as a beginning investor is: set it and forget it. Pick something that’s reasonable. Pick a, a fund or something that’s broad and reasonably inexpensive, and just be regular with it, whether it’s through your paycheck in a 401k or 403b, whether it’s automated into an IRA if you’re eligible for that. Whether it’s just a brokerage account and you’re adding a hundred dollars or $200 or $300 a month– get in the habit, set it up, make it automatic. We call that pay yourself first, and we’ve done shows on this and, and have some, some literature on this. The idea being that if you can learn to live on less than a hundred percent of your income it’s a great way to build wealth and avoid debt, which are very important. So as a beginning investor you don’t want to time anything, you don’t wanna say, “Is this Wednesday a good day to be investing?” You just want to get started and you want to add routinely and regularly, and you wanna ignore the news du jour. Whatever’s going on in the markets, whatever’s going on on the news– avoid it as best possible. It will not do you any favors. It’s really designed to, to make sure that people are watching so advertising can be sold. It is entertainment, it’s financial pornography, and it’s not gonna help you. Stick to reliable objective resources, and set it and forget it. Tony, I hope this was helpful to you. I certainly would encourage you to check out bfguniversity.com and make sure that you look into the various resources available to you there. There’s plenty of information on the internet. Unfortunately, a lot of it’s junk, so do, do make sure you check your source. But I hope this was helpful and and I hope I answered your question and I wish you luck. Investing is a, is a lifelong passion of mine and it’s one that that can take you places that you want to go. So by all means good luck with that. And I thank you for your question. If you’d like to send us a question, please post it on our Facebook page or tweet us at @brotmanplanning. We may answer it in a future episode of Office Hours. So thanks for listening. Please post your comments. Please like us on social media. Leave us reviews, they are priceless to us. And we’ll be back next Thursday with another engaging guest on Don’t Retire, Graduate. For now, this is Eric Brotman. Thank you for watching. I’ll see you next week.

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