You don’t have to be rich to start investing.
When I was 21, I was dating this guy that would go on and on about the stock market to me for hours. I tried to listen as much as I could to participate in his interests, but the fact of the matter was that I had no clue how the stock market worked. I wanted to be a part of it, and I knew that people that invested seemed to have it all together. I wanted to be like that, but I had no idea where to start.
Back then, the stock market was not easily accessible, and you had to have a brokerage account with a company and have a few thousand dollars to get started. This was 2012/2013. I can recall looking into the stock market and buying a book to try and learn how to become a trader. Even typing those words make me laugh now because I was really doing the most. I tried to make sense of the news surrounding stocks, ETFs, and everything else… but it was WAY above my very general knowledge.
Before we go any further, it’s essential for me to tell you I am not a financial advisor. I do not hold any investment licensing; this is just a recount of how I got started investing with very little money.
In this blog post, we are going to cover what the stock market is, what’s the difference between stocks and ETFs, and finally, why you shouldn’t wait until you’re rich to start investing. I will do my best to explain this in very basic terms so that anyone reading this can easily understand it.
First, let’s chat about the stock market. There are stock markets all over the world, and the U.S is not the only place that has one. There are markets in London, Toyko, China, etc. Currently, the largest exchange is the New York Stock Exchange (NYSE). A stock market is a place where investors small and large can organize loans, invest in companies, and trade currencies. Publicly traded companies give up shares of their business in exchange for capital to help grow and expand their companies.
Now, let’s talk about stocks. The best resource I have found defining “stocks” is Investopedia. According to them, a “Stock is a security that represents the ownership of a fraction of a corporation.” You can read more about their definition here (investopedia definition). However, it does not mean you own a part of the company if you buy a stock. That means you own a share of the company’s assets and profits. You can also receive dividends on your stock purchases, which can be in the form of cash or additional stock. However, not all companies pay out dividends; some reinvest earnings into the company.
The second term I wanted to discuss is an ETF (Exchange-traded fund). These are typically my favorite to invest in on the stock market because they track a sector, commodity, index, or another asset. In basic terms, an ETF is a mix of stocks, investments, bonds, or different investment types that follow a particular vertical. For example, let’s take water; for instance, there is an ETF that focuses on water, they will hold several different stocks, bonds, and other assets that are involved or connected with water. For me, this has been a great way to diversify my trading portfolio.
Before I bore you to death with any more financial jargon, I wanted to share why I got started investing and how much money I started with. In 2016 I learned more about the stock market and spent time reading yahoo finance and other easily accessible investing information. I decided that it was time I started investing, and I made it my new year resolution to start investing somehow. During my research of brokerages, I heard about the platform Robinhood and Acorns. A few people in my office were using them for their investment strategy. I looked into Robinhood and figured this was the easiest option for me to start with. They do not require a certain investment amount to start. The app user face is extremely user-friendly and easy to navigate.
Here is my Robinhood referral link: if you sign up & start investing, we both get a free stock!
At this point, I was listening to investment podcasts, reading about how to invest, keeping up to date with what stocks I wanted to buy, and trying to figure out where to start. I didn’t have thousands of dollars to get started, so I started with a number I wasn’t afraid to lose. The key to the stock market is to understand that once that money is in the open market, there is a good chance you can lose it all. I chose to start with $150 on January 1st, 2017. I made a fun savings challenge for you to download for free by subscribing to my newsletter. It’s a 30-day challenge that gets you to the same $150 that I started with.
When I first signed up for Robinhood, I committed that I would contribute $10 a week to start investing. I remember researching different ETFs that I felt would be something that would grow over the next 5-10 years. I bought a couple that is in the clean energy space. I ended up buying a few different types of ETFs, some in energy, water, cyber security, and oil & gas. I also followed a few companies that I wanted to invest in because I had seen them in the news and picked up a few stocks.
As time went on, I contributed more and more and grew my account. Now Robinhood is just my investment money that is there to play around with. I also have a 401k, a Roth IRA, and life insurance part of my full-spectrum investment plan. However, I got started on an app called Robinhood.
I am no investing genius, and I have made some mistakes and lost some money, but overall I taught myself a few things about investing, and I feel proud of myself for doing something that is growing my money. Over the past few years, I have watched my ETFs and stocks grow and continue to grow. I feel happy to look at my original investment and see what it has turned into now.
You don’t have to be rich to start investing, but we all have to start somewhere, and this is an easily accessible way to do it. Don’t wait until you have thousands of dollars to invest; start now. You don’t want to regret not starting earlier.
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