How to start investing

Training 615 minuteshow to start investing

You are 27, work at a clinic and earn $2,200 a month. Coworkers talk stocks all day, but you carry card debt and almost no savings. You want to start. Where first?

Training goal: Build the base, then start investing

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Situation

1. A $1,000 bonus lands. Your card debt is $2,000 at 24% a year. A coworker says buy stocks right now, "while they are going up".

Put the whole bonus into stocks
Pay off half the card debt
Leave it in checking for now

2. The debt is nearly gone. Your essentials cost $1,400 a month and you have $1,500 saved. A friend says put it all in the market.

Invest all $1,500, skip the cushion
Build the cushion, and put $50 a month in a fund
First build 3 months of expenses

3. The cushion is ready. You have two goals: a car in 2 years and retirement in 35. Where does each go?

Both goals into stocks, they pay more
Car money in savings, retirement in a stock fund
All in savings, stocks are too scary

4. You feel you need $10,000 to begin. Right now you have $150 a month to spare.

Wait until you have $10,000
Put $150 into a tip from a chat
Set up $150 a month into a broad fund

What you will learn

Order: expensive debt, a 3-6 month cushion, then investing. Small deposits can start alongside the cushion.
Money for the next 3-5 years stays in savings, money for 10+ years can go to stocks.
Start small, but regularly and automatically.

Your real-life step

List your debts with their rates and size your cushion: monthly essentials times 3.

Questions and answers

How much money do you need to start investing?

Many brokers and funds let you start with $10 to $100. Regular deposits matter more than the starting amount.

Should I pay off debt or invest first?

Debt above 7-8% interest is usually best paid first, since that is a guaranteed return. Cheap debt can be paid on schedule while you invest.

What is the best way for a beginner to invest?

Beginners are usually pointed to broad, low-cost index funds with regular contributions. You get diversification without picking single companies.

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Numbers are illustrative. A game, not financial advice.