Simple Ways to Invest On Your Own
Investing as a recent graduate from dental or medical school can be intimidating! For some busy recent graduates, using a financial planner may be wise, however, investing on your own can be simple and, if done well, can provide the same returns or better returns as if done by a financial planner.
The most important thing before you start investing large amounts of money is to save an emergency fund to get you through at least 3 months. Most financial planners will advise to save enough to cover 3-6 months of normal monthly expenses. Once you save up for a rainy day then you are ready to start investing!
Some of the best ways to invest are:
1) Contribute to a IRA, Roth IRA, or 401K
- If you have an employer match then this option is a no-brainer. Always max out accounts with an employer match because if not, you are leaving free money on the table.
2) Invest in taxable accounts such as stocks or index funds
Investing in index funds is one of the safest of all stock trading options. Index funds are basically a group of stocks that give you the average of the whole market or of a certain class of stocks in the market. I like investing in total market index funds, Growth index funds, value index funds, and REIT (Real estate) index funds. Most index funds have averaged 10% annual returns over the past 80 years. Index funds have less volatility (big ups and downs) than individual stocks.
I like index funds over individual stocks because individual stocks are so unpredictable. If that company has a lawsuit or has an outbreak of e. coli in the food they serve or has some scandal then that stock may tank quick. The nice thing about index funds is it is more averaged across the market and one companies bad news wont make or break your investment. You can play less of the game and sleep better at night while still enjoying solid returns!
Start with these two options listed above and if you have money left over to invest or want a little extra in your portfolio then consider Crowd-funded real estate such as Peer Street, Crowd Street, FundThatFlip, 1031 Crowdfunding, or Real Crowd, all of which have good reviews and solid fundamentals.
Types of investments to avoid:
1) speculative type (bitcoin)
2) sound "too good to be true" or ones that promise crazy returns
3) investments that do not carry with it a tangible asset (property, earnings/proven sales, equipment)
Many people will come to dentists, doctors, and other high income professionals and will ask for funding for a start-up or with an idea that has no tangible asset. I would avoid these because if the investment goes belly up then you will loose your entire investment and will not be able to salvage losses by selling an asset such as a property.
Investing is not all that difficult and crazy as you think. My first investment in dental school was $50. There are a number of apps and websites you can use to invest in the same investments that a financial planner or stock broker will charge you thousands of dollars for. Many apps and websites charge little to no transaction fees and you can get the same stocks or investments that professionals can provide.
Below is some information on apps and platforms you can use to invest your money. I would recommend starting out in small increments to get used to how it all works and to learn what type of investments you like and don't like. My favorite of all investment platforms is a totally free stock trading app called Robinhood. Each trade is free and has NO fees! The layout is clean and easy to use. I would recommend everyone to open up a free account and put in $100 or so and try it out. Below are some of my favorite investing options that I think are worth your time for those who want to or are thinking of managing their own investments.
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