10 Tips to Start Investing Now

Who isn’t concerned about money these days? Every morning, it seems we’re waking up to dismal news about unemployment, the stock market, and gas, housing and food prices. And let me count the number of ways analysts and experts are avoiding using the dreaded R-word: “Rece$$ion” (I can’t even type it!).

There’s a lot of fear these days, financially speaking, and it seems everyone is feeling the crunch. At least one person I know got laid off, my roommate took on a second job, a lot of couples I know are fighting about money (but what else is new?!), and overall, people just seem more stressed out.

One of the ways to ease some of your financial concerns is by making smart decisions with your money. We all dream about retiring at 40 with millions in the bank, but chances are, that’s not going to happen for everyone. However, if you take action now and take control of your finances, you can all retire comfortably on your nest eggs. The idea is to start now.

Here are 10 money tips to help you get started:

1. Start now… no matter how little you may have: Take advantage of your age and start planning for your future. For example, if you’re 25 and you invest $20 a week in a retirement account earning 10% a year, it will add up to over $108,000 by the time you are 50. If you start investing the same amount when you’re 30, you’ll have about $63,000 when you’re 50. That’s a 42% difference!
2. Know how much you can afford: First and foremost, you must know your monthly fixed expenses and have a budget. A simple, practical goal is the 60-10-10-10-10 budget. 60% of your monthly income goes towards your bills such as rent, utilities, car payment, groceries, gas, and loans. The other 40% is divided evenly into four categories: long-term savings, short-term savings, emergencies, and miscellaneous spending.
3. Know your personal goals and your financial goals: Determine what items you would like in the near future (emergency fund, new car, vacation) and set your financial goals for the long-term (retire with $1 million in the bank, buy real estate).
4. Understand your time horizon: If you put $4,000 into a CD or a Roth IRA when you’re 25, you will not magically have a million dollars in the bank and be able to retire at 40. Give yourself enough time to realistically achieve your goals. You may want that car now, but if you save for one year you can increase your down payment and decrease your monthly payments.
5. Know your risk tolerance: Some investments are more stable than others. Would you be comfortable sitting back watching your money fluctuate on a daily basis, as with trading stocks and commodities, or would you rather put money in an account and watch it mature?
6. Establish an emergency fund: Generally, this means having at least three months’ worth of your salary in an account that is easily accessible, such as a regular savings account, a money market account or a growth fund. You never know when you’ll get a flat tire, need a new timing belt, require dental work, get laid off or, worse, fired.
7. Find out if your parents have their affairs in order: Most of us don’t like to think about our parents dying or being injured, but it’s important to know their plans in case the burden falls on you to figure out their finances. Know where their wills, life insurance, bank information, mortgage and loan documents, and other policies are kept.
8. Get out of debt: Pay off your credit card debt as soon as possible. Credit cards charge an average of 19% on your outstanding balance. So, if you have $4000 in debt on your Visa, and you pay the minimum $20 a month, the credit card company will add on another $756 in finance charges. You’ll be paying off that credit card for years and spend thousands of dollars on finance charges alone. Cut up that card and increase your monthly payment until it is paid off.
9. Don’t put all of your eggs in one basket: Don’t invest all of your money into one company or into different companies within the same sector. It’s important to make sure you have a diverse portfolio. Spread your investments throughout different product lines such as retail, automobile, real estate, biotech or tech stocks.
10. Take action! Ask your friends about their investments and ask them for a referral. Grab the Yellow Pages and start calling insurance agents, financial advisers or brokerage firms. Whatever you do, do something!

For more money tips from Waste Time Wisely, read: 

Do You Need a Certified Financial Planner?
Do Men Make More Money by Simply Asking for More?
5 Ways to Put a Lil’ Extra Cash in Your Wallet

Jovie Baclayon is the editorial director for YSN.com and an expert in the experiences faced by emerging adults. To learn more, check out Jovie’s YSN portfolio and feel free to e-mail her! She blogs every Wednesday and Friday on Waste Time Wisely.