When you think of investing or investors you probably picture Wall Street suits or high-profile venture capitalists. The truth is that you don't need millions of dollars in order to invest and there are many opportunities beyond picking stocks or funding start-ups. Today there are a number of ways to invest your money and get returns on it. Additionally, while no investment is without risk, having a diversified portfolio can help prevent you from losing your shirt. 401ks, IRAs, and Roth IRAs If you don't have a 401k or other retirement account, stop reading this and go open one. One of the best investments you can make is in your own retirement and 401ks are a great way to do that. In addition to the returns you can get from the invested funds of your account many employers will offer to match your 401k contributions up to a certain percentage. This should be your absolute first stop on the road to investing. Those who want to further invest in their retirement may want to consider IRAs or Roth IRAs. Both are also retirement accounts but are usually independent from your workplace (although you can rollover your employer 401k to an IRA or Roth IRA should you leave that company). A regular IRA allows you to make contributions and subtract that money from your taxable income. On the other hand, with a Roth IRA, you pay the taxes upfront but then don't have to pay taxes on the withdrawals you make once you reach retirement. It may be worth speaking with a professional to decide which option is best for you. Understanding the Stock Market Despite how much of our economy revolves around the stock market the average person probably has little idea how it works or how to get in on it. Part of this may stem from the days when buying and selling stocks required a broker — an actual person who you'd need to call to execute orders. However now there are many platforms such as eTrade or apps like Robinhood that allow you to buy and sell stocks right from your computer or even your mobile phone. One thing you'll probably notice very quickly is that the stocks of companies you've heard of can be pricey. For example Alphabet (Google's parent company) is currently selling for more than $700 a share while Disney is far cheaper at $100. The good news is that you don't need to buy a ton of shares in order to invest. Just keep in mind that, depending on the broker or stock trading platform you use, you may incur fees for that may offset your returns. In addition to owning stocks you can also purchase what are known as options. There are two basic types of options: puts and calls. Stated simply owning a put gives you the option to sell a stock at a predetermined price and a call gives you the option to buy at a certain price. Buying and selling puts and calls can be very beneficial if done correctly but that's a lesson for Investing 201 ;) Other Ways to Invest If the stock market isn't for you there is still hope. The FinTech movement has brought with it several new ways to invest your money. One such example is peer to peer lending. Peer to peer (P2P) lending matches up borrowers in need of loans with investors willing to contribute. What's in it for them? Investors on platforms like Lending Club receive a cut of the interest that the borrower will pay on the loan over time. Investing in P2P can be a great option for beginners for a number of reasons. First it's easy to manage your risk by choosing to lend only to borrowers with strong credit scores. Additionally Lending Club allows investors to put as little as $25 towards any given loan, further diversifying your investment and your risk.
Investing isn't just for the super rich. In fact nearly everyone should invest their money in some way. Whether that means having a 401k, buying a few stocks, or looking into other options there are plenty of opportunities to get your money working for you. Class dismissed.
Investing 101: Options for Getting Started was originally seen on Dyer News
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