The idea of hiring a financial advisor makes me very uneasy.
“What’s the catch?”
“This is too good to be true.”
“Where’s the angle?”
These are the battle cries of a man who has pledged not to be swindled, hornswoggled, or otherwise bamboozled.
Perhaps it’s the Scorpio in me, but I am immediately suspicious of anyone trying to sell me anything. Some people say that a healthy dose of skepticism is important to protect yourself from the would-be scammers of the world. Others might consider this approach to be overly cautious, or even paranoid.
Although there might be a few opportunities that I’ve missed over the years on account of being cautious, I think my guarded nature has kept me out of a lot of sticky situations.
However, this became a dilemma in my late 20’s when I was finally earning more than I was spending each month and had no idea what to do with the extra cash. I knew how the stock market worked in theory, and I had studied up on the different types of retirement accounts, but I just wasn’t ready to hire a professional.
My favorite investing tips from Think Save Retire
- You probably don’t need a financial advisor because no one knows your financial situation better than you.
- Times of economic downturn can actually be the best time to invest.
- It’s never too late to start investing and there are multiple strategies to get you up to speed.
- Real estate investing can be your key to FIRE, and you don’t necessarily have to be a landlord.
Do I really need a financial advisor?
I asked myself this question and really struggled to find an answer. I could definitely use some guidance, but only celebrities, athletes, and the ultra-wealthy need financial advisors, right? And how am I supposed to trust a total stranger with large sums of money, my most sensitive information, and my plans for the future?
In his article What is a financial advisor (do I even need one?) Dock Treece addresses this dilemma:
…the very fact that you’re reading this article suggests that you’re already far more aware of your financial situation than an advisor is ever going to be. So, the only thing left for you to do is to spend some time studying different investments and identifying those that suit your needs and risk tolerance.
The beauty of this statement is that Think Save Retire is continuously publishing the investing tips that you need in order to be your own financial advisor! The unfortunate part however, is that I hadn’t been able to save much (any) cash in my 20’s, and I was very behind in terms of retirement savings.
Investing during tough times
Obviously one of the biggest stories of 2020 has been the COVID crisis and the financial strain that it’s put on our country. With so much uncertainty in the world, right now can’t be a good time to invest, right? According to Dock, times of economic downturn might actually be the best time to invest.
But, we do know that things will get better. And, while it may sound cold, times like these are usually some of the best times for investing. Prices get distorted, and you can find good investments for cheap because someone else needed to sell.
Wait, the economy is tanking amid a deadly virus outbreak, and now is a good time to invest?!
When you think about the previous disasters that have led to economic downturn, historically the market has always recovered. If the market was able to recover through the great depression, 9/11, and the downturn of 2009, it’s probably a pretty safe bet that we’ll recover from this as well.
But that doesn’t necessarily mean that you should go out and dump your life savings into the market right now. It’s important to have a solid long term strategy in place if you’re active in the market during a period of economic downturn.
It’s best to stick with big names—the companies that come to mind when you hear the words “too big to fail.” These are the companies that the government literally won’t let go broke.
Check out this article on recession proof investing for a full list of the companies that Dock considers “too big to fail”. **At the time of this writing I own stock in JP Morgan Chase, American Express and Wells Fargo which are all featured on the list.
But what if you’re not that interested in the stock market, or you’re looking for a way to diversify your investments?
Making up for lost time
“How do I get caught up and where do I even start?”
These were the burning questions that plagued me in my free time.
When I first started investing, I definitely had more questions than answers. There’s a ton of investing tips on the internet, but that actually made it even more difficult to decide on a strategy because I didn’t know whose advice to trust. There’s just so many terms to define, concepts to understand, and numbers to crunch. The more I thought about all the variables, the less inclined I was to get started.
The key to saving and investing is to consider lots of options, try different things, and figure out what works for you. But, then you have to keep at it.
If you’re trying to figure out how to invest when you feel like you’re behind, a big part of the secret is to just jump in and try things. You’ll notice that I didn’t say that you should jump in with both feet.
My first stock trade ever was for literally $1. I made a bunch of micro-investments using the investment app STASH, and then I monitored the progress over a month. It gave me a really good idea of what to expect in terms of growth, loss, and volatility on a small scale. Before I knew it, I was making trades worth several hundred dollars, usually from the comfort of a bean bag chair.
In the spirit of “keeping at it”, I’ve also scheduled time each week to check in on my investments so I can get a feel for what’s working and what isn’t. I know I need to play the long game, so I’m not necessarily making adjustments and trades each week, but I am making sure that my overall strategy still makes sense.
By the way, Dock includes a solid list of suggested stocks to look at if you’re starting from square one. **In the interest of full disclosure, at the time of this writing I own stock in JP Morgan Chase as well as American Express which are both featured on the list.
Real estate investing for newbs
I used to think that owning an investment property would be more of a hassle than it’s worth. It’s hard enough to afford a residential property for myself, now I have to come up with the dough to finance additional properties? AND I’m responsible for fixing all the things that my renters break? It seemed like too tall of an order until I read these two sentences:
Once you build a portfolio that provides enough rental income, that’s it. That’s all you have to do to achieve some level of financial independence and quit the rat race forever.
That really puts the headaches of owning an investment property into perspective, doesn’t it?
If you don’t have the capital for an investment property just yet, or you simply don’t want the stress, there are alternative ways to invest in real estate.
If you want to invest in real estate but don’t want the headaches that come with doing so much work yourself, real estate investment trusts (REITs) or other alternative deals may be just the ticket. These options are hardly the stuff of HGTV dreams, but they make it possible to invest in real estate with the help of industry experts.
Editor’s Note: We recently featured Republic Real Estate, a new player in the real estate crowdfunding space that offers micro investments in urban residential development properties, on Think Save Retire.
My bottom line
Investing tips are worthless if they don’t lead to a direct improvement of your bottom line.
Following the advice that I’ve found on Think Save Retire has directly led to a 5.13% return on my investments over the past year!
Whether you’re just starting out with investing, or you’re a seasoned investor looking for advanced techniques, TSR has you covered.
Where do you get your investing tips? Let me know in the comments section!
Originally posted at https://thinksaveretire.com/investing-tips/