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How To Start Investing Your Money

Last Updated: July 1, 2024
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Investing is the process of putting your money to work for you. This allows you to spend less time exchanging dollars for hours, and instead spend your time on the things you value.

However, to take advantage of the benefits that investing has to offer, this requires an understanding of the basics.

Before you begin investing, it’s important to make sure you are protected in the event an unexpected expense arises.

Tips Before You Invest

The first step to getting started with investing is setting aside an emergency fund.

An emergency fund is typically 3 to 6 months of living expenses. This should include all of your non-discretionary expenses such as rent, mortgage, utilities, food, etc.

To get an idea of your ideal emergency fund, you should consider creating a budget to understand your living expenses.

An emergency fund needs to be immediately available to you, should you have an emergency. Whether it’s a car repair or a medical bill, unexpected expenses will not wait around until your stock portfolio increases in value. That is why you should not invest your emergency fund.

For this reason, it’s important that you hold your emergency fund somewhere you can have fast access to it. Our recommendation is a high-yield savings account.

This will allow you to earn a competitive rate of interest, especially if you use an online savings account. Saving your money in a high-yield savings account versus a traditional bank account allows you to protect your buying power from inflation.

Investing In Stocks

Once you have your emergency fund set aside, you can now start thinking about investing your extra money coming in.

The stock market is a place where people buy and sell shares of companies. A share represents a small ownership stake in a company. When you buy a share, you become a part-owner of that company, and your investment can grow as the company grows.

Investing in stocks can potentially offer higher returns compared to other savings options like bank accounts or bonds. Stocks can increase in value over time, and some companies also pay dividends, which are small payments to shareholders.

Investing in stocks comes with risks. The value of your investments can go up and down, and you could lose money if a company performs poorly. However, with careful research and a long-term perspective, investing in stocks can be a powerful way to build wealth.

In order to buy stocks, you will need a brokerage account.

Robinhood is one of the most popular modern-day investing apps. You can trade all of the major stocks and ETFs available on the NYSE and NASDAQ. You’ll even get a free stock worth up to $200 if you sign up using our link!

Investing In Real Estate

Investing in real estate is a popular way to build wealth by purchasing properties with the intention of generating income or profit. The basic idea is to buy a property, such as a house, apartment, or commercial space, and either rent it out to tenants or sell it at a higher price later.

There are a few key steps to successful real estate investing.

First, research the market to find properties in desirable locations where property values are likely to increase. Next, secure financing, which might involve taking out a mortgage or using personal savings. It's important to budget for all costs, including purchase price, repairs, property taxes, insurance, and maintenance.

Once you own the property, if you choose to rent it out, you'll collect monthly rental income. This income can cover your expenses and, ideally, provide profit. Being a landlord involves responsibilities like finding reliable tenants, handling maintenance issues, and ensuring the property complies with local regulations.

Alternatively, you can invest in real estate by flipping houses, which means buying a property that needs repairs, fixing it up, and selling it for a profit. This requires a good understanding of renovation costs and the ability to manage a project efficiently.

Another option is investing in Real Estate Investment Trusts (REITs), which allow you to invest in real estate without actually buying property. REITs are companies that own, operate, or finance income-generating real estate and pay dividends to investors.

Real estate investing can be rewarding, but it also comes with risks, such as market fluctuations, property damage, and unexpected expenses.

Crowdfunded Real Estate

In recent years, crowdfunded real estate investments have grown in popularity. This allows you to passively invest in real estate without all of the headaches associated with owning properties directly.

Real estate crowdfunding is a way for many people to pool their money together to invest in real estate projects. Instead of buying a property by yourself, you join with other investors to collectively fund a real estate deal.

An online platform connects investors with real estate developers or property owners looking for funding. The platform lists various real estate projects, like residential buildings, commercial properties, or new developments.

Crowdfunding makes real estate investing accessible to more people because you can start with smaller amounts of money compared to buying a property outright.

Fundrise is one of the most popular platforms for crowdfunded real estate investments. Over 2,000,000 individual investors are using the platform to diversify their portfolios into real estate and other alternative assets. In addition, the minimum investment is just $10.

Investing With Robo-Advisors

Another popular option for investing is leveraging a robo-advisor. This can be a great option for those who are looking to invest without picking and choosing their own stocks or ETFs for their portfolios.

A robo-advisor is an automated, algorithm-driven financial planning service designed to provide investment management with minimal human intervention. This comes with the benefit of lower investment management fees compared to using a human financial advisor.

The process begins with a client completing an online questionnaire that gathers essential information about their financial situation, investment timeline, and risk tolerance. Using this data, the robo-advisor creates a diversified portfolio, typically composed of low-cost exchange-traded funds (ETFs), designed to maximize returns while managing risk.

One of the primary advantages of robo-advisors is their cost-effectiveness. They often charge lower fees compared to traditional financial advisors, as they do not require the same level of human involvement and operational overhead.

Additionally, robo-advisors provide accessible financial services to a broader audience, including those who might not have substantial assets. Many robo-advisors offer features such as automatic rebalancing, where the portfolio is periodically adjusted to maintain the desired asset allocation, and tax-loss harvesting, which helps minimize tax liabilities.

Investing In Crypto

Cryptocurrency investing has surged in popularity over the past decade, transforming from a niche interest into a mainstream financial strategy. At its core, crypto investing involves buying and holding digital currencies like Bitcoin, Ethereum, and numerous altcoins with the expectation of future price appreciation.

Unlike traditional investments, cryptocurrencies operate on decentralized blockchain technology, offering transparency and security without the need for intermediaries like banks. This decentralized nature is one of the primary appeals of cryptocurrencies.

Long-term holders believe in the fundamental value and future potential of cryptocurrencies, often driven by the limited supply of coins like Bitcoin, which mimics the scarcity of precious metals.

Active traders, on the other hand, capitalize on the market's high volatility, seeking to profit from short-term price fluctuations. This volatility, while offering significant profit opportunities, also poses substantial risks.

The crypto market can be highly unpredictable, influenced by factors such as regulatory news, technological advancements, and macroeconomic trends.

Coinbase is one of the most popular cryptocurrency exchanges available today. This is a secure platform for buying, selling, transferring and storing various crypto assets. With Coinbase, you can invest as little as $10 into crypto assets. In addition, new users can get up to $200 in free Bitcoin if you sign up using our link!

Dollar Cost Averaging

We are now going to cover some of the tried and tested investing strategies.

Dollar cost averaging is an investment strategy where you regularly invest a fixed amount of money into a particular asset, such as stocks or mutual funds, regardless of its price. This means you buy more shares when prices are low and fewer shares when prices are high.

Over time, this can reduce the average cost per share and mitigate the impact of market volatility. It's a way to build wealth gradually while spreading out the risk of investing a large sum at the wrong time.

If you were looking to invest $100,000 for example, you would not want to invest the entire sum of money all at once. Instead, you would want to invest in routine intervals. This could mean investing $1,000 each week, for example.


Another important strategy to be aware of and to follow is diversification. As the saying goes, “don’t put all of your eggs in one basket.”

Diversification is a strategy used in investing to spread your investments across different types of assets, such as stocks, bonds, and real estate, to reduce risk. By not putting all your money into one type of investment, you can protect yourself from significant losses if one investment performs poorly. This way, even if some investments don't do well, others may perform better, helping to balance out your overall returns and making your portfolio more stable and less risky.

That is why you will often see investors spreading their money out across real estate, stocks, and even alternative assets like crypto.

The Bottom Line

Keep in mind that investing is a marathon, not a sprint.

By learning the ins and outs, this will allow you to avoid making common mistakes, such as failing to diversify. You can now enter the world of investing with a bit more confidence than you had before!

Keep Reading

Power Your Investing

Choosing the right product and service is essential for your investing. Here are some of the tools and services to help your portfolio grow.
Robinhood provides an easy-to-use free trading platform for beginner investors. Robinhood has $0 account minimums. Get a free stock when you open an account below.
Try Robinhood
M1 Finance
M1 Finance offers a free investing platform where users can build portfolios of stocks and ETFs. Users can also choose from a variety of pre-built portfolios offered for free.
Try M1 Finance
Passively invest in private real estate deals with as little as $10. Fundrise allows you to own residential and commercial real estate across the U.S. starting at a 1% annual fee.
Try Fundrise
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