We have dreams, and some, if not all require money to fulfill them. If we think about it today, our tomorrow would be safe, enjoyable and probably we would have good money to fulfill our dreams, and for that we should plan from the beginning – earlier the better.
Many people don’t invest because it seems overly complicated. But if you want to build wealth, investing now is the easiest way to do so—and anyone can do it. Here are some basic steps to set up a simple, beginner investment portfolio that will make you money while you sleep.
Investing Is Easy: Just Set It and (Mostly) Forget It
When a lot people think of investing, they imagine painstakingly picking individual stocks, tracking their daily performance and constantly buying and selling. This might make for good movies and TV shows, and sure, you could hire a financial adviser to do this for you, but the fact of the matter is that most financial advisers fail to beat the market. So, why pay a financial adviser a bunch of money for something you could do on your own? (If you’re dealing with an abnormally large sum of money, though, and are a bit over your head, a good financial adviser can be a worthwhile endeavor.)
Instead, most smart investors try to match the market, which, over a long period of time, tends to improve. Past performance isn’t an indicator of future performance, but it’s all we have—and over the long term, the stock market averages about a 7% annual return. That’s pretty solid!
So, all you need to do is pick a couple funds that attempt to mimic the total market’s behavior, and—for the most part—leave them alone for 20 or 30 years. It’s very simple, and it’s something everyone can and shoulddo. In fact, it’s one of the best ways to effortlessly build wealth in the long term.
Many refer to this as “buy and hold” or “set it and forget it” investing—because it requires little effort and you don’t have to constantly track your portfolio. You will have to check in once a year or so, but it takes minimal work, and you can mostly leave it alone. Which is perfect for us average joes.
Step Zero: Open an Investment Account
If you don’t have an employer-sponsored 401(k), you’ll need to open an investment account in order to actually start investing. If this is your first investment account, you’ll probably want to open an Individual Retirement Account, or IRA. We’ve outlined the process here, but here are the basics:
- Decide whether you want a Traditional or a Rot