Maybe you just graduated college, or maybe you’ve been out for a while and are just starting to feel like you’re getting established in your career. Either way, it’s likely that someone, somewhere along the way has told you to start investing for the future. But you have student loans to pay off and your landlord just raised the rent, how can you possibly start investing now?
Think Big. Start Small.
You might think that you need thousands of dollars to start investing. With Beanstox, you don’t have to worry about account minimums or even share prices because you can buy pieces of company shares and invest on your own terms. So, even if you only have $50-$100 to get started, you can build a diversified portfolio by investing in fractions of company shares on the Beanstox app.
Don’t Try to be a “Stock Picker.”
Trying to beat the market by picking individual stocks is a risky strategy, especially if you don’t have a lot of money to get started. A less risky strategy to deploy would be to focus on building a diversified portfolio. This means your investments should span different industries, asset classes, and geographic locations. The reason for this is that, historically speaking, it’s unlikely for these subsections of the market to move in unison. Therefore, spreading your investments out over various subsections of the market, helps to manage risk and protect your portfolio from major volatility.
One easy way to build a diversified portfolio is to invest in some ETFs, which are securities that track an index, a commodity, bonds, or a basket of assets. Some ETFs, such as the SPDR DIA, which mirrors the Dow Jones Industrial Average, follow a benchmark index, which tracks economic movements in a particular portion of the market. So, by investing in just a few ETFs, you can gain exposure to multiple companies, asset classes, and industries. However, it’s important to keep in mind that there are additional embedded costs. All ETFs have expense ratios which cover the costs of operating the fund. These costs are embedded into the price of the ETF.
Rinse and Repeat.
Investing is something you should strive to make a habit. Not one of those annoying habits, like making sure you have clean socks at the start of every week, but a habit that is easy to stick with- so easy, that it’s a no-brainer. If you make it part of your routine to regularly add $5, $10, $20, or whatever amount you’re comfortable with to your portfolio, you can take advantage of dollar-cost-averaging. This basically means that you’ll keep investing regularly, regardless of share price, so you’ll buy more shares when prices are low and fewer shares when prices are high. Eventually, the average cost per share will decrease. Dollar-cost averaging lessens your investing risk because you aren’t seeking to time the market by putting all your money into an investment at a single point in time, which allows you to focus on diversification as you invest. It’s good to think big, but it pays to start small.
All investing carries risk. Past performance is not indicative of future returns, which may vary. Investments in stocks and ETFs may decline in value, potentially leading to a loss of principal. Online trading has inherent risk due to system response and access times that may be affected by various factors, including but not limited to market conditions and system performance. An investor should understand such facts before trading. The risks associated with investing in international securities, including US-listed ADRs and ETFs that contain non-US securities include, among others, country/political risk relating to the government in the home country; exchange rate risk if the country’s currency is devalued; and inflationary/purchasing power risks if the currency of the home country becomes less valuable as the general level of prices for goods and services rises.
Most inverse ETFs “reset” daily, meaning that these securities are designed to achieve their stated objectives on a daily basis. Their performance over periods longer than one day can differ significantly from the inverse of the performance of their underlying index or benchmark during the same period of time. This effect can be magnified in volatile markets, making it possible that you could suffer significant losses even if the long-term performance of the index showed a gain. While there may be strategies that justify holding these investments longer than a day, buy-and-hold investors with an intermediate or long-term time horizon should carefully consider whether these ETFs are appropriate for their portfolio.
Before investing in an ETF, an investor should consider the investment objectives, risks, charges, and expense of the investment company carefully. The prospectus contains this and other important information about the investment company. You should read the prospectus carefully before investing.
Beanstox app’s brokerage service partner, DriveWealth’s unique Fractional share program allows you to purchase securities in dollar amounts rather than share quantities. Please be advised that trading in fractional shares has unique risks and limitations that you should understand prior to participation in DriveWealth’s Fractional Share Program.