Perhaps, you’ve heard it on the news… Apparently, millennials are less comfortable with investing in the stock market than with saving cash.
That sounds realistic to me. As someone struggling with student loan debt, I understand the desire to minimize bills and save as much cash as possible for the inevitable emergencies that will come. I am invested in the stock market to the extent I am able, but I don’t put every spare penny in the market.
Most of my investing is done via my employer’s retirement plan. But recently, I decided to invest a little on my own. After all, why not give it a try? You might be thinking the same thing.
If you haven’t done it yet, you might want to start with just $50 or $100. Opinions vary, but I like the recommendation to open a TD Ameritrade account. Then, if you want to take advantage of market trends, buy however many shares of an ETF that you can afford.
Why TD Ameritrade? TD Ameritrade has comparably low fees, no minimum balance (if you keep things simple), and a big selection of non-commission ETFs.
What are ETFs? It stands for Exchange Traded Funds. They don’t try to beat the market, they try to be the market; and they trade like a stock. By owning an ETF, you get the diversification of an index fund but also have the ability to sell short and purchase as little as one share. Plus, the expense ratios for most ETFs are lower than those of the average mutual fund. Be warned that ETFs can be a very complex product. If you are an inexperienced investor and want to try an ETF, choose carefully and don’t start with something that is based on leverage, commodity futures or other complex concepts.
If you aren’t much of a believer in the market, maybe you have a stock or two that you really believe in. Buy what you can afford and then let it ride for a while. Letting it ride can be difficult when stock prices are ever-changing. That’s why it’s important to invest in a stock that you feel has long-term potential. Then you’ll be less likely to sell when the stock is just having a bad day. This method doesn’t give you diversification, but, for some people, it results in a more positive, less frightening experience.
Whatever you decide to do, you should do some research so that you know what to expect. And, always be aware of your risk tolerance. Don’t choose an investment that makes you uncomfortable or invest more than you can afford to risk.