In this week’s episode of “Making It Work,” one woman illustrates the specific tactics she used to become a *serious* investor, despite earning less than $40K a year. Learn how another woman went from broke to comfortable in on year in this video:
Making it work is brought to you by wealth simple which gives everyone access to simple affordable investing on cruise control here’s the thing i don’t have a lot of money i grew up with immigrant parents who are extremely frugal because they lived without a lot of money and remembered what that economic insecurity felt like i remember talking to my dad in high
School about the best way to invest and his advice largely boiled down to stay away from the stock market unless you’re really sure of what you’re doing needless to say i grew up with the idea that investing is only for rich people who’ve got money to lose then helene olan’s book the index card changed my mind she managed to lay out a basic investment strategy
An easy-to-understand terms and after reading it i started feeling like wow maybe i can do this too when i first started out investing i was making a grand total of thirty seven thousand dollars a year it took some time but i’ve now been investing in the stock market and decidedly careful way for two years and i’m now farm savvy er i’m slightly wealthier investing
Doesn’t need to be scary or complicated here are the seven steps i took to make it that way number one i opened a 401k in the us a 401k is one of the most common types of employer sponsored retirement accounts i only open one because my company offered a seven percent match if i invested one percent which is what i did at first i’ve since stepped up my contributions
To ten percent of my salary as an automatic deduction i felt the financial pinch of this decision for a month or two but then i forgot about it it became the new normal i didn’t mind seeing ten percent go to retirement savings and my savings balloon sing it with me automatic transfers are your friend number two i tried out an investment up there are a number of
Smartphone apps that let you invest from anywhere even with a very small amount of money for me i started with an amount so small that i barely missed it it was a super easy way to get a sense of what real investing might actually look like i did this for about six months until i felt comfortable doing it on my own which led me to open my very own brokerage account
Number three i opened a brokerage account brokerage accounts that you buy themselves different types of investments all in one place they sound so fancy and adult like that it took a while for me to realize i ready had one with my bank i started funding my brokerage account with my tax refund since then i’ve set up an auto deduction of $50 from each paycheck every
Time i’ve made some extra money in overtime or through freelancing i’ve contributed that as well number four i invested mostly in a broad-based diversified portfolio of low-cost exchange-traded funds or etfs 24-year old me is rolling her eyes at that sentence but it’s pretty simple there are broad-based etfs that track entire markets or indexes like the sp500 as
Well as a diverse range of more specialized etfs that focus on particular sectors like health care or technology by combining several etfs you can create a diversified portfolio in which a bad year or decade of eventual implosion of one or more sectors is likely to be at least partially offset by strength or stability in other sectors number five i decided it was
Safer to invest my eggs in many baskets a blue-chip stock is a stock that’s considered in the mind of a general population as a reliably profitable stock because the stock is tied to a glamorous too-big-to-fail company but the blue-chip category is just that an idea as helene owen says if there was a magic stock that you’re a financial advisor could just buy and
Make a fortune off of they’d be on a private island rather than managing your investments this isn’t to say that investing in blue chip stocks is always a bad idea or definitively a guaranteed to bring you losses it just means you’re putting your nest eggs in fewer baskets which is always riskier the risk assessment of blue chip stock options probably involves a
Lot more insider knowledge of a certain industry than i currently possess and that means it’s probably not for me number six i got really lazy when i first started investing i checked my brokerage account obsessively and agonized over dips and celebrated games on a near hourly basis now i’m way more relaxed about things studies have shown that when you just leave
Your portfolio alone it will generally make money instead of losing money over a long period of time it’s an attitude that fits well with my overall laid-back attitude in life my general approach is set it and forget it meaning that once i’ve made an investment i write it off let’s see when i retire i’m not planning to liquidate any of my investments for at least
A decade or two i’ve made it a point to only invest what i can reason we afford to ride off i always have a separate easily accessible emergency fund for short term money needs number 7 i really ate as i get smarter the thing is a lot of really rich people get wealthy by investing their money into something not just letting it hang out under their mattress and
Then they teach their kids to do the same there’s a natural profitable learning process for the already well-off this makes it even more important for people like me with an inherited aversion to risk to find ways to replicate that success in our own small way i know how hard it feels as a non rich person to let go of money that could be making your life easier
Today for uncertain uneven risky gains in the future yes it is hard to open myself up to the risk that the investments i made with dried i’d bushy-tailed optimism might fail but when it comes down to it investing as a wee twenty-something even in my small careful way means harnessing the magical powers of compound interest early in hopes of a more secure financial
Future i may not wind up a millionaire but by investing this way i’ll almost certainly earn more money than the meeker interest on a bank account and that means everything to me you don’t have to put off planning for the future until you start earning more money in fact investing can have a lower barrier to entry than you might think and with a company like vault
Simple you can start making your money work for you now whatever that looks like for you wealth simple is online investing that’s as simple and human as it gets in just five minutes they’ll build you a custom portfolio to fit your personal goals and timeline just answer a few easy questions and they’ll manage your money for you on autopilot set it forget it and
Let your money grow in the background you can turn on automatic deposits as well as set up a smart savings account with higher rates than big banks for your shorter term goals you’re writing your next great adventure or that handbag you need they also have a socially responsible portfolio that invests in green stocks and companies that support gender diversity the
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Transcribed from video
My 7 Steps To Becoming A Serious Investor On A $37,000 Salary | Making it Work By The Financial Diet
