Start Here Archives - Page 3 of 4 - Keeping Up With The Bulls

How to Start Investing

02.21.2019 by admin // Leave a Comment

Do you want to start investing but you’re not sure how to start? Don’t worry that you don’t have enough to start investing. Remember, everyone had to start somewhere and you can still learn the same lessons whether it’s $1,000 or $100,000. Everyone is a little bit different, and it ultimately depends on how comfortable you feel taking risks and about your own personal finances. Before you do start investing though, what should you consider?

Feel Comfortable With Your Finances

First, you need to feel comfortable with your finances. What does comfortable mean? It means if an emergency comes up you have cash on hand to cover it and don’t have to go into additional debt. When you invest, money isn’t as liquid. If you invest in stocks for example and you need to sell stocks it takes a few days to get the cash from the sale. In addition, the price of the stock may not be the price you want to sell it at.

Have Manageable Debt or No Debt

You can invest if you’re in debt and you should invest even as you’re paying the debt off. How much depends on how high your interest rate is. The average return of the stock market historically is 10% before inflation, which is why 7% is a better benchmark to use. That doesn’t guarantee 7% return per year but it’s a good benchmark to use. If the interest on your debt is less than 5% it may be worth it to invest extra money instead of paying extra to pay down your debt faster. On the flip side, if the interest on your debt is 20% you will have a better return putting money towards paying down this debt faster.

Learn About Different Types of Investments

The easiest investments to start with are stocks, mutual funds and ETFs (electronically traded funds). Stocks are passive investments and they have decent liquidity. You can start very small, buying only a share or even fraction of a share. It may seem small to start, but the investment will hopefully grow over time either by appreciated or investing more money in the stock. If you’ve never invested, start your search by looking into ETFs (exchange traded fund that tracks a stock index) and companies you know well on Google and Yahoo Finance. These investments can also be bought as part of tax advantaged retirement savings accounts like 401(k) and Roth IRA.

There are also alternative investments, like investing in real estate, REITs and private companies. However, there are certain restrictions here which make them harder as a first investment. If you’re investing in real estate there is more capital required to get started. Crowdfunded REITs also have certain minimum investments and charge you a fee if you try to sell the investment within a certain time period. You’re required to be an accredited investor to invest in most private companies. There are certain exceptions to this including crowdfunded investments.

See Also: How to Generate Passive Income

Learn About Where to Purchase These Investments

Stocks, mutual funds, bonds and ETFs can all be purchased through companies like Charles Schwab, e-trade and Robinhood. Crowdfunded REIT companies include Rich Uncles, Fundrise and Realty Mogul.

Real estate can be bought with the help of a broker. However, knowing people in the industry will get you farther as often real estate investors have access to buying real estate before it’s even listed.

See Also: How To Invest Money In Your 20s

Set Financial and Timeline Goals

How much do you want to save? If you don’t have an emergency fund fully funded yet when will it be? How much money do you want to invest? When will you need this money?

Investments are less liquid than cash. If an emergency comes up, you need to be able to handle that from your emergency fund. You shouldn’t have to touch your investments. With any investment there is no guarantee it’ll keep or increase in value and you may lose money. With stocks, you can convert the current value to cash in the time it takes the transaction to settle (usually 2-3 days). Real Estate isn’t liquid until you sell it or you take a loan against the property to free up some cash. Investing in private companies is the least liquid. You are completely dependent on the agreement, and you could lose the entire investment. Understand the liquidity you need in the short and mid-term before you start investing.

By setting goals you’ll better understand what investments are best for you. If you don’t have enough money to meet those goals yet, don’t be discouraged. Continue learning more about the investments you’re interested in so when you do have enough money you can buy the right investment(s) for you quickly. Additionally, look for ways to earn more money in your career, through side hustles and spending less money in the first place.

Take Advantage of Retirement Savings Accounts

Once you determine your goals, identify how retirement savings accounts fit into that. If your company offers a 401k and you aren’t already contributing to it, set one up. Many companies offer 401k matches which is free money. Additionally, 401(k) contributions are pre-tax meaning you don’t pay tax on that money earned. Instead, you pay taxes on that money when you withdraw it during retirement. Roth IRA accounts are funded with post-tax dollars. That means you pay tax on the money you contribute now when you originally make the money but don’t pay tax when you withdraw money from your Roth IRA in retirement. There are rules to be familiar with for Roth IRA accounts before you get started.

Avoid Trying to Time The Market

Don’t wait until stocks look cheaper to buy. It’s very hard to time the market. Instead, invest small amounts of money consistently. Over time, it will average out.

Start Investing!

The next step is to actually start investing. Remember, don’t be discouraged if you lose money initially. Like anything, it takes practice and dedication to get good at something. Plenty of mistakes will be made along the way but it’s progress, not perfection.

Automate Your Savings – The Quickest Way to Saving More Money

02.02.2019 by admin // 3 Comments

Automate Your Savings, automating your savings

Think you can’t save more? Think again. When you automate your savings you’ll remove the step of manually moving money from your checking account to your savings account. The fewer steps you have to take to save money, the higher probability you’ll save more money.

I’ve talked to many friends who really want to get better at saving but just haven’t been able to. I’ve created budgets for them and it works for a few weeks but then their spending habits return back to normal. They see how much money is in their checking account and spend it. The number one thing that has helped them save more money is to automate their savings. If you see money available in your checking account and spend it, start automating your savings today.

What Does It Mean to Automate Your Savings

Automating your savings means you remove any manual steps to save money. A manual step usually includes having your paycheck deposited in your checking account and then you initiate a transfer of some of that money to your savings account. To automate your savings, set up direct deposit to your savings account when you get paid. Then, when you get paid your savings automatically is in your savings account, no manual transfer required.

There’s no more thinking about how you need to move money from one account to another and creating risk that you may spend some of that money before you remember to move it. You can set how much money you want to save in your savings account and forget it. You’re still able to spend this money in a pinch if you need, but that extra step of having to use another account and know you’re pulling it from your savings account helps scale back the spending and increases your success in growing your savings. Periodically you can check in and see how much your account has grown!

See Also: How to Generate Passive Income

How to Automate Savings By Setting Up Direct Deposit To Your Second Checking or Savings Account

Most companies offer select multiple accounts for direct deposits when you get paid. Choose which account gets a fixed amount every paycheck and which account gets the remainder of your paycheck. If you don’t have the link on setting up direct deposit your company provided you when you joined, search your internal HR Portal / intranet or ask your manager / HR.

You’ll need:

Bank Account Number
Routing Number
Type of Account
Bank Name and Address (you can use any address of the bank)
Account Holder Name

Best Time to Start Automating Your Savings

The best time to set up your savings account as a second direct deposit account is when you get a raise. Even if you only direct $25 per bi-weekly paycheck to another account, you’ll save $650 / year. You won’t miss this money if you time it with a raise because the amount you’ll see in your primary account won’t go down.

Another way to start is to look at how much you want to save for the year. If you want to start at $1,000/ year, you only have to direct $38.50 per bi-weekly paycheck to your savings account. If it’s $5,000, set aside $192.30 per bi-weekly paycheck to go to your savings account and then have the rest of your paycheck go to your checking account. And at that point, what’s another $16/ month? If you increase it to $200 / paycheck you’ll save $5,200 that year.

You also have the opportunity to set your savings account as the account that gets “everything else” and your checking account gets a set amount of your paycheck. In this scenario, if you get an unexpected bonus or raise it’ll automatically go to your savings account.

This is really what they mean when they say “pay yourself first.” And, it’s a great way to begin building your emergency fund.

The same is with your 401k. Anytime you switch jobs or get a raise you should increase your contribution to your 401k, even if it’s just 1%. Over time, it adds up.

What are ways you’ve found to automate savings and increase your savings rate?

Legalized Equity Crowdfunding: What to Know

01.20.2019 by admin // Leave a Comment

So you want to invest in private companies but you aren’t an accredited investor quite yet? Title III of the JOBS Act, passed in 2012, created an opportunity for the average investor to invest in private companies. Regulation crowdfunding allows startups to raise up to $1,070,000 per year from both individual investors and accredited investors through registered funding portals.

There are still some limitations such as how much a person can invest in a 12 month period. These investment limits are inflation-adjusted.

If your annual income OR your net worth is less than $107,000, you can only invest up to the greater of either $2,200 or 5% of the lesser of your annual income or net worth
If both your annual income AND net worth are equal to or more than $107,000 then you can invest up to 10% of your annual income or net worth, whichever is less, but not to exceed $107,000

If your annual income is $150,000 and your net worth is $200,000, the JOBS Act crowdfunding rules will let you invest up to $15,000 over a 12-month period. It is $15,000 and not $20,000 because your annual income is less than your net worth.

Generally there is a feeling that the limitations and regulations most companies still restrict investments from non-accredited investors, and the JOBS Act hasn’t had the impact intended. Mainly, companies don’t want to pay the associated costs and file all of the mandated disclosures when they can raise capital under Regulation D which is both easier and cheaper. However, there are some bright spots. Crowdfund Capital Investors wrote a report and found that while the market is still young, it is growing at a rapid pace and found a high success rate for offerings.

You can find all of the registered funding portals on the FINRA website here. FINRA also provides an overview of Crowdfunding and what Investors should know here.

Has anyone invested in private companies through these funding portals? What was your experience?