TOP 3 FREE INVESTING APPS FOR 2019 (Best Brokerage Accounts 2019)
Heres how to start investing while youre still at your first job
Anyone can invest. 20th Century Fox
- might sound scary if you're not a finance guru, but it doesn't need to be.
- Even if you don't make much or you're paying back student loans, financial experts say you should start investing at your very first job.
- Joining your employer's retirement plan and using apps such as Robinhood to invest your spare change are some easy ways to get started.
The idea of investing can be intimidating, especially if you're just starting out in the workforce. You might think that you need to have a bunch of money or be a stock market expert in order to invest.
But that's far from the truth, according to financial experts.
You don't have to be a stock market expert to start investing. Paramount Pictures
"Anyone can invest," Erin Voisin, director of financial planning at EP Wealth Advisors, told INSIDER. "With investing and millennials, I think it's just important to do it and really just get a sense of the markets and how it works. And then when you watch the news, you kind of understand because you're in it a little bit."
Here are some top tips from financial experts on how to start investing at your very first job.
First, make sure you have an emergency fund.
You don't need a ton of money to start investing, but youshouldhave a cushion for emergency situations, according to Stefanie O'Connell, a financial advisor for millennials and author of "The Broke and Beautiful Life."
"While you should ideally begin investing immediately, it's important that you have at least some cash buffer in your savings account before you start splitting your efforts between savings and investing," O'Connell told INSIDER.
Set aside some money for emergency situations. Screenshot via Mad Money/Big City Pictures
Most financial experts recommend having anywhere between .
Then, look into your employer's retirement plan.
Once you have your emergency fund established, you should start investing in your workplace.
"For people just starting out in their careers or at their first job, the best way to get started investing is to join their workplace retirement plan, if they have one," Andrea Coombes, an investing specialist at NerdWallet, told INSIDER. "Often, employers will match your contributions up to a certain percentage — that's free money you don't want to pass up."
Talk to your human resources department to learn about your company's policy. If your workplace doesn't offer a 401(k) plan, you can see if .
Open up an individual retirement account.
If your company doesn't offer a retirement plan for you to contribute to, you can open a retirement account by yourself.
"If you don't have a retirement plan at work, or if your plan only has expensive investment options, then look into opening an individual retirement account (IRA)," Coombes said.
One way to open an IRA is through an online discount broker. Charles Schwab, and Fidelity are some of the most reputable traditional brokerages for opening an IRA, according to O'Connell.
Personal finance website Nerdwallet compared the top online brokers to find the ones with the best tools, platforms, and investment selection for the best price.
You can open an individual retirement account through an online discount broker, a robo advisor, or a financial advisor. Shutterstock/SFIO CRACHO
O'Connell said you can also use a robo advisor, "if you want to simply answer a few questions about yourself and your goals and have an investment action plan recommended for you based on your answers."
A robo advisor can be a great solution to avoid the procrastination and feeling overwhelmed that can come with investing, O'Connell said. She suggests checking out or Ellevest.
Millennials who have many years ahead of them before retirement should also consider opening a retirement account called a Roth IRA, Voisin said.
"I love Roth IRAs for young people," she said. "I just think they satisfy so many different goals because they can be used as a retirement account. They can be used as a backup emergency fund. You're allowed to use a certain amount for a first-time home purchase. And it allows you to invest."
Nerdwallet sorted through different providers to come up with a list of the best Roth IRA accounts.
If that seems too complicated, talking to a financial advisor might be your best option.
Invest your spare change with smartphone apps.
If you don't want to put much thought or effort into investing, there's an app for that — several apps, in fact, some of the most popular being Robinhood, Betterment, and Acorns.
"It's a really easy way to not think about having to almost allocate more of your budget to savings — because you're just using spare change, more or less," Voisin said.
However, you should be aware that these apps charge high fees which can be a significant chunk of your investing balance if you're not investing a lot.
Smartphone apps such as Acorns are a great way to invest without thinking about it. Acorns
O'Connell noted that while investing your spare change is a good way to get started, it's not the best long-term strategy for investing.
"So while it's OK to start investing with these types of tools, eventually, you'll want to take that next step and scale up your investment contributions and strategy as you're able," she said.
You can still invest if you're paying off student loans.
If you're one of the many millennials with student debt, you might think you have to wait until it's paid off before you can start investing. But experts say that's not the case.
"Balances on low-interest debts, like many student loans, can be tackled in tandem with an investment strategy," O'Connell said. "In other words, you don't have to finish paying off the former to get started on the latter."
But if you have high-interest debt such as credit card debt, you should tackle those balances aggressively, she said.
"Like building a savings buffer, keeping up with the minimum payments on your debts has to be a top priority," she said.
Paying off high-interest credit card debt should still be a priority. Touchstone Pictures
Voisin said that investing apps such as Acorns and Robinhood are ideal for millennials with student loans.
"Basically, in my opinion, any amount you can get in there is going to help you," she said. "So even if it's a month that you can give up, or a month, ultimately that is going to grow to be much larger and maybe even help you pay down those student loans in the future if you've accumulated a large enough balance."
Do your research to get more confident about investing.
If you want to get more into investing, you need to educate yourself. Most young people tend to only look at mainstream names when deciding where to invest their money, Voisin said.
"Millennials love to pick those stocks that they think are going to go up or companies that they use all the time or kind of the ones that you do a quick Google search of 'top stock picks,'" she told INSIDER. "I tend to see Amazon, Google, Facebook, Snapchat."
The big names aren't necessarily bad choices, depending on the market, she said. But to make the smartest possible investment decisions, millennials should take the time to do a bit of research, she said.
If you want to get serious about investing, talk to a financial advisor. Shutterstock/Monkey Business Images
"We want to make sure that they're not putting all their eggs in one stock and then not having any idea why they're investing in it other than they saw it online somewhere or a friend invested in it," she said.
She recommends seeing a financial advisor for guidance.
"I don't think anyone is too young to have a financial advisor because no one is too young to start investing," Voisin said.
Video: How To Invest Your Money In Your 20s
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