Smart Money Tips: How to Start Investing Today

Stocks, bonds, and real estate are a few of the many ways to invest your money. Yet, if you’re new to investing, where and how do you start? It’s a question that begs an answer. The problem is, you’ll always get a different answer, depending on who you ask.

There is a myriad of ways to invest, and not all of them are ideal for every person, especially if you’ve never invested before. Investing can be tricky, depending on what you’re investing in. Stock markets fluctuate daily, sometimes multiple times a day. Pool all your money into one stock that tumbles on a rough market day, and you risk losing everything.

There are safer ways of investing, though. For beginners, it’s often better to start small to build your experience, gains, and confidence while you also build your portfolio of investments. So, what do you start with? The answers might surprise you.

Start with a Savings Account

Always start by looking at your current savings account. The average American currently has about $5,300 in savings. That’s enough to cover a few minor emergencies, but it won’t last forever. It’s better to fully fund your emergency savings before moving on to investing.

A fully funded savings account should cover 6-9 months of your living expenses. However, some might need to boost this to cover up to 12 months of living expenses. This account is essential because if you or your spouse becomes injured or ill or experiences a job loss, you’ll need your emergency savings to help cover expenses until your situation resolves. For most of us, a six-month emergency fund is enough, but 9-12 months is better in some situations such as:

• You have chronic health problems
• Your income fluctuates (such as with freelance or contract work)
• You live in an uncertain economy

With that said, there’s a difference between a regular savings account and a money market account. Some banks offer both, but at Extraco, all savings accounts are also money market accounts. This benefit is good news for you. Money market accounts often require a higher minimum deposit than traditional savings accounts, but money market accounts also offer a higher return, or annual percentage rate, on your balance. In other words, the money you save will work harder for you rather than you working harder for your money.

Consider Investing in CDs

Once you’ve fully funded your emergency account, another type of safer investment to consider is a certificate of deposit. You’ll need at least $1,000 to start a CD, but you can build from there. When you buy a CD, you lock in your investment for the term of the CD, and withdrawing your funds early generally incurs a penalty. However, you can choose from many terms. Extraco Bank offers CD terms that range from 30 days to 24 months. The longer the term, the more interest your investment earns.

Some people build what’s known as CD ladders. Essentially, you buy multiple CDs, each with a different term. This way, you’ll gain access to your funds at different times. As each CD matures, you’ll need to decide whether to roll the investment into another term, choose a different term, or withdraw the funds. The choice is yours.

Learn more about what certificates of deposit can do for you.

Consider Stocks, Bonds, Mutual Funds, and More

When you’re ready to move up to a more robust investment portfolio, consider collaborating with an experienced financial planner. A financial planner will review your goals and help you choose the right mix of investments for your portfolio. That might include stocks, bonds, mutual funds, exchange-traded funds, retirement plans, and annuities.

Your financial planner will help you align your best interests with your goals for an investment portfolio that makes sense for you. Extraco Bank believes in only working with the best in the industry. For that reason, we’ve partnered with Raymond James Financial to help you meet your financial goals. For more information, complete our online wealth and trust inquiry today. Want to smart small? EasyInvest in the Extraco eBank app is a great way to test out the investing waters.

The Final Word

Don’t wait to start investing in your future. The sooner you start, the sooner you’ll put your hard-earned money to work for you instead of the other way around. It doesn’t take much to start, either. As previously mentioned, begin with your savings and build your investment portfolio from there.

Start building your wealth today to secure a better financial future for tomorrow.