Toward the end of 2012, I talked a bit about young folks and the market, speculating about why so few want to invest their money and then following up with a list of reasons why they should.
Unfortunately, up until now, it was more of a “Do as I say, not what I do” list. Because while I participate in my company’s 401(k) program, I had yet to take all my experience at InvestorPlace and actually apply it to stock- or fund-buying beyond that.
I made a New Year’s resolution to change that and, while I’m only human and procrastinated the process for the first month of the year, I finally have my brokerage account set up, my funds transferred and am ready to get started.
With that in mind, here are a few tips on how to get the ball rolling for other twenty-somethings who similarly have decided that it’s time to get in the market.
Sign up: I’m hoping anyone with the option has already signed up for their company’s 401(k) plan, so I’ll skip that step. For those of you looking to buy a few funds that you want access to before you reach retirement age, it’s time to open a brokerage account.
Before you just pick a random one, shop around. Compare fees, promotions, minimums and so on. Different sites will offer different resources and, depending on how much you plan to put in your account, free trades.
At the same time, though, remember that whatever account you pick is just a means to an end. I started sorting through countless brokerage accounts and found that there was a high chance that I wouldn’t be putting enough money in upfront to get any kind of bonus. Instead of being overwhelmed and caught up in the fine print, I just picked one.
It’s better to just get started than to flip-flop over details that, in the big scheme of things, will hardly matter.
Get to know your account: Once you have your account set up, start clicking around. Become familiar with its features. Know whether or not you can buy and sell options. Know how much it will cost you per trade. Know how the service tracks your stocks and funds. Know what an upgraded service would get you.
Of course, this also might be overwhelming to a first-time investor. With that in mind, a great idea is to find someone who already has a brokerage account and can give you a quick “tour.” This passenger-seat experience will help you sort through and understand which features are the most important.
Just do it: This one is easier said than done. But sometimes it’s best to simply get the ball rolling with a purchase you’re confident in, so inertia is on your side.
Oftentimes — as can be the case with sorting through different brokerage account services — we can become paralyzed by possibility. There’s even a catchy name for the condition — “analysis paralysis.” The best thing to do, first of all, is just get into the market. Don’t expect to make the perfect pick or have the perfect portfolio right away. Heck, if you’re starting with one buy just to get things going, snatch up a fund for instant diversification.
With that being said, exactly which fund — or what your idea of a perfect portfolio is — is subject to your personal investing goals … and we’ll talk through that next week.
For now, go sign up for that account. To end with a cliche just because I started with one: You said tomorrow yesterday. What are you waiting for?
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