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Investing 101: Navigating the Exciting (and Slightly Scary) World of Investing

Investing 101: Navigating the Exciting (and Slightly Scary) World of Investing

February 15, 2024

Are you an investor? Statistically, women may risk having less wealth over their lifetime due to a gap in investment participation. The gap in investment participation is influenced by a variety of contributing factors, including lower income and pay disparities, career breaks due to childcare or eldercare responsibilities, a gap in financial literacy, and a marketing and industry bias. 

What do you fear about the world of investing? Investing may feel like a rollercoaster ride– thrilling potential mixed with heart-pounding uncertainty. Yet, in today’s world, investment tools and knowledge are more accessible than ever before. 

If you are new to investing, where do you begin? The following is a breakdown of actionable steps you may take to enter the world of investing.

Step 1: Know Your Numbers

First, get a clear picture of your financial landscape by tracking your income and expenses. Are you saving money or living paycheck to paycheck? Having enough to cover essentials is crucial. Essentials include your rent/mortgage, bills, groceries, debt payments, and emergency fund. How much do you need in your emergency fund? Take the number for your expenses and multiply that by six (if you are single) or three (if your partner or spouse also contributes income). 

Step 2: Revisit Your Savings Plan

Investing works alongside your savings plan, not instead of it. Identify how much you can realistically set aside for investments. Consider automating monthly contributions to make it a seamless habit. 

Step 3: Investing Decoded

Feeling overwhelmed by terms like "stocks" and "mutual funds"? Resources like the National Association of Investors (NAIC) offer unbiased education and tools to help you understand different investment options. Check them out at https://www.betterinvesting.org/.

Step 4: Choose Your Investing Adventure

Ready to choose your path? Here are some options:

  • Do It Yourself (DIY) investor: Many online platforms allow you to start with as little as $50. Do your research and be confident in your decisions.
  • Partner with a pro: Consider a financial professional. Ask about their fees (commissions, fixed rates, etc.) and their fiduciary status (putting your interests first). Research their background at www.brokercheck.finra.org .
  • Hybrid approach: Combine DIY with professional guidance for a mix of control and experience.

Step 5: Craft Your Investment Roadmap

An Investment Policy Statement outlines your "how, what, why, when, where, and who" of investing. It guides your decisions and keeps you on track.

Step 6: Remember, Risk is Real

Investing involves the potential to lose money. The past performance of an investment does not guarantee future results. This is why it is so important to only invest what you can afford to lose.

The key to investing is to start where you are today and make informed decisions to shape your future. If you want professional help, a CERTIFIED FINANCIAL PLANNER™ may create a personalized investment plan tailored to your unique situation and goals. 

Remember, investing is a journey, not a destination. Take it one step at a time, educate yourself, and boldly reach out for help when needed. Happy investing!

Wendolyn Forbes is a CERTIFIED FINANCIAL PLANNER™ with Wealth Transition Finance, A Member of Advisory Services Network, LLC. Wendolyn is a fee-only financial planner and member of the National Association of Personal Financial Advisors (NAPFA). For more information, please visit her website at www.wtf-asn.com.

Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™ and federally registered CFP® (with flame design) in the US, which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.

This material is provided as a courtesy and for educational purposes only. Advisory Services Network, LLC does not provide tax advice. The tax information contained herein is general and is not exhaustive by nature. Federal and state laws are complex and constantly changing. Consult your own legal or tax professional for information concerning your individual situation.

Originally published in the February 14, 2024 issue of Rumble by Smoky Mountain News.