Investing

What’s the best way to start?

What’s the best way to start?

Kimberly L., if I were starting to invest today, I'd first want to make sure I had funds available to invest. Before investing, you should have an emergency fund to cover unforeseen expenses. I'd also advise against investing any funds you may need in the near future, for example, money saved for a car or a down payment for a house. These types of funds are probably best kept in a high-yield savings account.

Then, you'll want to determine where your investments will be held. These can be divided into taxable accounts and tax-advantaged accounts. Tax-advantaged accounts include an employer sponsored 401(k) or 403(b), IRAs, HSAs, etc. If you have access to these, they can offer tax benefits.

Lastly, you'll want to determine in what you'll invest. I think for most people, the best options are broad market index funds, either as mutual funds or ETFs. The benefit of the ETF is that you probably don't need a lot of money to start investing, and if the ETF is passively managed, expenses are likely low.

Hope this helps.

401k is a great investment for young people from their first job, and continuing till retirement age.

401k is a great investment for young people from their first job, and continuing till retirement age.

In general, I agree, but there are other considerations. First, does the employer offer a 401k (or 403b)? How are the investment options? How are the fees? Is there any employer match? What are the requirements for vesting? In some cases, it may be better to open a traditional or Roth IRA before investing in a 401k.

veer