starting to invest

4 Simple Steps to Help You Start Investing in 2013


by

16 January,2013

For many, investing seems like a hopelessly complex way to make money. However, the truth is that investing doesn’t have to be complex. If you are interested in getting started with investing this year, there are a few steps to take to get you on the right track:

1. Open an Account at a Discount Brokerage

It’s easy these days to open an account with a discount brokerage. Web sites like TradeKing and Vanguard¬†offer easy to open accounts with low minimums, and the ability to start investing with a relatively low amount of money.

2. Start Investing in an Index Fund or Index ETF

If you are just starting out, an index fund or an index ETF can be a good choice. You can begin with an all-market fund in order to give you the widest variety of diversification. Or you can invest in an index fund or ETF that follows an index you know about and feel will perform well. In any case, starting with this type of investment can be very helpful, since you can start with dollar cost averaging.

3. Decide What You Want to Accomplish

Now that you are at least started with investing, you can determine what you want to accomplish, and what steps you need to take to reach your goals. Most investment brokerages offer you IRA opportunities, so you can boost your retirement account contributions — something that can be especially important if you aren’t happy with your employer’s 401(k) investing choices.

Figure out what you need to do in order to reach your goals. If you aren’t sure about how you should proceed, you need to do some research. You can let your investment in an index fund or ETF keep you going while you learn about investing, and make decisions. If you are just looking for a set it and forget it solution, you can look into brokerages like Betterment, which assess your goals, and then provide you with automatic asset allocation based on what you want to accomplish.

4. Make Changes to Your Investments as Needed

After you have done the research, and figured out more about investing, and how it works, you can start switching things up. You can look into individual stocks — including dividend paying stocks. You can also consider bonds, real estate (including REITs), and even futures and options trading. But before you move on to the more advanced investing concepts, you need to have a firm grasp of them, and how they work.

Bottom Line

Investing doesn’t have to be difficult or complex. Technology makes it easier than ever for anyone to get started with low-cost investing. Many regular investors are likely to do just fine if they invest in the less complex investments, like index funds and index ETFs. You can branch out later, but only after you have built a solid foundation. It’s vital that you don’t invest in something that you don’t understand. Get started with an index fund or index ETF, and then learn more about investing so that you can expand your portfolio later if you want.