Investing 101: What You Need to Know

A major key to achieving and maintaining wealth is found within the power of investing. For many, investing comes with great hesitation. On one hand, investing is indeed a risk and it’s a risk that includes your own (hard-earned, if I may add) coin. On the other, many side-eye investing simply because they don’t know how it works or even where to start.

If you’re interested in investing, but hesitant to start out, here are your questions answered.

Why should you invest?

One of the best ways to build the wealth you desire is research. By definition, to invest is to expend money with the expectation of achieving a profit or material result. Truth is, in order to reach that revered level of financial stability the wealthy talk about, we need multiple streams of income. Consider investing one of those streams. (Though it can be more depending on how much you invest).

What to invest?

“What” and “how much?” to invest is dependent on your savings goals. The more you save, the greater risk you can take. It will also make way for the greater stability you will have because yay, you’ve been saving for a rainy day! (KEY TAKEAWAY: Savings accounts save lives. Keep a healthy one alive at all times!)

Stocks and bonds are a great way of investing. Knowing where to put your money is a step that will require great research. Whether you’re into tech companies or start-up businesses, first start out by researching which companies you can purchase stocks to. See how well, or not so well,  the company has performed in the stock market. (Keep in mind that performance will fluctuate because that is just the nature of stocks!) Acorn is a great application you can download that will help you become familiar with automated investing.

Retirement funds are also another great step to investing. Often times, we focus on our present finances rather than the future. This tends to be our mindset when thinking of investing. Start by investing at least 3% of your annual salary into your retirement fund. Each year, increase that percentage by at least 1%. The more you invest, the more you will have to enjoy when you decide to kick your feet up at the end of your career!

Check out  Stash to learn how to make the best investment decisions for yourself.

How much to invest?

Having a detailed budget will help you to decide how much you should invest. Start out by creating a budget that includes your monthly expenses like bills, loans and leisure. You should only invest a percentage of the income remaining AFTER those bills have been paid.

Some finance experts will recommend that you invest between 10% to 15% of your yearly earnings. If that’s not achievable just yet for you, start with a minimum that works for you.

Written by Tara Drinks

A native of Long Island, Tara Drinks is the creator and lead writer of The New Journalist. She’s also an editorial coordinator for Understood.org – a division of the National Center for Learning Disabilities, and one-third of the 2nd Service podcast.  

In this new era of journalism, Tara is inspired to create a showcase of extraordinary stories for all to enjoy. Her work has since been published on The Huffington Post and Reader’s Digest. 

Tara obtained her Bachelor of Arts in Mass Communication with a concentration in Journalism from the University of Bridgeport, CT. She is a proud member of Alpha Kappa Alpha Sorority, Inc., and of the New York Association of Black Journalists.