It’s never too early to start building your investment portfolio and saving up for your future. If you’ve been reluctant to start building an investment portfolio because you think you don’t have the money or you don’t know how you should reconsider. It’s probably much easier- and requires much less money than you thought- to start building an investment portfolio.
The following are seven simple ways that you can start building your investment portfolio today:
Pay off outstanding debts you have where possible
You should begin working toward paying down your outstanding debts before you start investing in your portfolio. If you owe money on loans and credit cards, you will be losing money each month on interest costs. Paying down your debt will reduce the amount of money you’re losing to interest on a regular basis.
Take advantage of a roboadvisor
If you don’t know much about investing, you could get started with a roboadvisor to handle some of the main decisions for you in the beginning. You don’t need any experience with or special knowledge of investing to work with a roboadvisor.
There are numerous roboadvisors out there that can help you to start building a portfolio on autopilot. These services will usually charge you a small percentage as a fee for using their services.
Although some roboadvisors have minimum balances that clients need to meet before they can use the service, many do not and are perfect for those who are just starting out with building a portfolio.
Stop renting and purchase a home
Don’t forget that a home is part of a portfolio. If you are able to be approved for a mortgage loan, you might want to consider buying a home. This way, you will be building up equity in a property rather than throwing away money on rent every month.
If you decide to purchase a home as part of your growing portfolio, do so wisely. Make sure you’re getting a competitive closing price on any property you buy. Also, put some thought and research into whether or not property values in the area in which your property is located are likely to rise in the coming years. It may be a good idea to acquire help from a service like POP Buyers Advocate to find the perfect property for your unique needs.
Open up a Roth IRA account
According to many investing authorities, a Roth IRA is one of the best account types out there for those who are looking to invest and create an investment portfolio. It’s typically fairly easy for consumers to qualify for this type of investment account.
As long as you don’t make more than $137,000 as an individual or $203,000 as a married couple, you should qualify to open up a Roth IRA. The reason Roth IRAs are so advantageous for many consumers is that they make it possible to avoid taxes on investment earnings.
Contributions are made to Roth IRA accounts after the taxes have been paid on those earnings. However, no taxes are required on withdrawals from a Roth IRA account after the account holder has turned 59 and a half. Also, account holders can withdraw money from the account at any time before they turn 59 and a half. They’ll just have to pay taxes on the earnings.
Use the employer retirement plan resources that are available to you
If you are an employee, chances are your employer offers some sort of retirement plan resources that you could take advantage of. One of the most common resources offered by employers is the 401(k) plan with contribution matching.
You should definitely take advantage of contribution matching from your employer’s 401(k) plan if it is available. Contribution matching means more money that you’re getting from your employer for all your hard work.
Find the right online broker
These days, there are many different online brokers in business that have made it easier than ever to purchase stocks and other investments. Many of the online stock brokers out there are tailored to beginning investors. This means that they’ll provide you with advice and helpful information on what the best moves are when you’re just starting to build your portfolio.
Find an online broker that provides you with the resources you need as a beginner. An online stock broker can help you to learn the ropes of investing and make your first contributions to your retirement.
Invest in mutual funds
For those who are not too familiar with investing, it’s always a good idea to put money into mutual funds rather than into individual stocks. A mutual fund is an investment security that allows the investor to put money into a stock portfolio all at once. This way, the investor doesn’t need to make individual choices on what exact stocks the money goes into. Mutual funds also include investments into bonds.
There is one thing investors need to be aware of regarding mutual funds before they get involved. This is that most mutual funds do require some minimum investment. However, there are low-initial-investment mutual funds out there. It is typically possible to start investing in a mutual fund with as little as $500 starting out.
In some cases, a mutual fund might waive the opening deposit amount if the investor agrees to automatically invest an additional sum of between $50 and $100 each month. This might be the best option for those who want to start investing in a mutual fund but don’t have a lot of investment funds available at the get-go.