Investing questions: How to get started in 6 steps


For many Americans, the only financial goal as of late has been staying afloat.

As many as 78% of Americans report they earn just enough money to pay their bills each month. So how does one get off the hamster wheel? You start looking for other financial opportunities like investing.

Investing isn’t complicated. But I’m not going to sugarcoat it and tell you that by reading one article you’ll be ready to buy your first stock – although you could.

After the meteoric rise of GameStop stock two weeks ago, new investors took to the market in hopes of making enough money to pay down debt.

Like most big financial decisions in your life, investing requires careful consideration and setting some time aside to learn the basics before dipping your toe in the water.

‘The only option to grow your money’:Why new investors bought stock during the pandemic

Robinhood CEO:We’re helping those left behind by Wall Street, not hedge funds

When talking to my peers who are not in the market, one thing kept coming up: Who do I go to for help?

Well, there are countless resources out there, but if people don’t even know what to ask, those resources are useless.

Dheerja Kaur, head of core product at Robinhood, agreed. “People perceive the tools and resources on investing are just not made for them,” she told USA TODAY.

Investing questions: How to get started in 6 steps

Robinhood recently made its mark by causing a market disruption powered by individual investors betting on stocks like GameStop, AMC and Blackberry. Similar, to Acorns, Stash and Invstr, these investing apps are making the process more accessible to women, minorities and all individuals.

There’s an entirely new generation of investors drawn by apps who still haven’t developed a plan for their portfolio. But as the saying goes, you don’t have to have the answer to everything, you just need to know someone who does.

For new investors and those thinking about joining the market alike, it would be in their best interest to sit down with a professional to set some goals. Here are some steps to set yourself up on a good investment path:

1. What should I look for in a financial planner or investment adviser?

When choosing a financial adviser it’s important to conduct an interview. This is a person who will be handling your money, so you shouldn’t rely on a fancy title alone or go with the first option.

“Start by asking people you know and trust … Financial planning and investment management is very much a referral type of business,” said Monica Sipes, a certified financial planner and senior wealth adviser at Exencial Wealth Advisors.

“First, ask how investment decisions are made,” she said. “Make sure you are comfortable with that – it could be an individual adviser (making those decisions), it could be at the firm level, it could be that they’re outsourcing that. And also ask, how the adviser or the firm is compensated,” she added.

If you still don’t feel like you’ve gotten enough from them try the interview classic, “what else should I be asking you?” The answer can give you a sense of the work style, commitment and experience of the adviser.

“You want to also make sure the adviser is not incentivized to sell you certain products and that they are independent advisers,” said Brian Walsh, Jr., Senior Financial Advisor at Walsh & Nicholson Financial Group agrees. “Fiduciaries are legally bound to recommend only investments and products that are in the best interest of the client.”

He added that you shouldn’t rush a decision and that you must do your research, interview multiple advisers and go with the one that feels right for you.

There are also resources to find financial advisers if you’re the first one in your family or friend circle to take the step. Sipes recommends visiting www.letsmakeaplan.org to find advisers in your area.

2. What investment terms should I know?

It’s also good to know some investing terms before you come across them. Here’s a list of terms financial advisers recommend you know:

  • Asset allocation: a strategy balancing your risk tolerance and goals by apportioning a portfolio’s assets.
  • Fiduciary: the person or company that acts on your behalf.
  • Brokerage account: an account with a licensed brokerage firm to place trades on your behalf.
  • Retirement account: an account to be accessed after retirement (or during an emergency, in some cases).
  • Investment vehicle: the products you invest in, e.g. certificates of deposit, bonds, stocks, options, or futures.
  • ETF: an exchange-traded fund is a type of security made up of a collection of securities.
  • Mutual fund: an investment vehicle made up of a pool of money collected from many investors to invest in securities
  • Registered Investment Adviser (RIA): a person or firm who advises high-net-worth individuals on investments and manages their portfolios

Source: Investopedia.com

3. How much money should I be investing?

This is personal, as with most investment decisions. However, there are some key points that have proven over time to yield good results.

“At a minimum, you need to be saving 20% (of your income),” said Sipes. “My more aggressive investors are saving probably closer to 40-50%.”

If you are starting out, committing that amount of money is nerve-wracking. Investing apps, like Robinhood and Acorns, have options to invest as little as $1 at a time with fractional shares, which is a great option for those who want to get familiar with the process. The amount of money you invest, ultimately, is what you decide – and dependant on your risk tolerance.

Investing apps make it easy for beginners:Here’s how I started with $100

“What I tell clients is that you want to first make sure you have three to six months of living expenses in an emergency fund, such as short-term savings,” said Walsh. “Make sure you are contributing to your employer retirement plan if one is offered, and take advantage of the match if available. From there, it will depend on how much net cash flow you have leftover each month and what your goals are.”

4. How many stocks should I own?

Before stocking up, investors would be wise to consider the investment vehicle and account that they are using since those details could play a part in the number of stocks needed for diversification.

“If you are investing in individual stocks, which I do not recommend unless the rest of your investment portfolio is constructed in a way to reach your goals, no more than 20 stocks should suffice,” Walsh said, pointing out that research has shown that more than 20 stocks in a portfolio “don’t necessarily lead to better overall risk diversification. We build portfolios using low-cost funds and ETFs and we usually have between seven to 10 funds in a given portfolio. There is no need to have more than that.”

Sipes, on the other hand, believes 35 to 50 stocks can create a diversified portfolio. “Picking individual stocks can be difficult, so oftentimes for investors starting out, I recommend index funds, like an ETF or something like that.”

Once again, this highlights the importance of sitting down with a financial planner who has your situation and goals in mind.

To that end, Sipes reminds us that consistency trumps the amount. “It’s important to set a plan and stick to it. And that’s where we see clients have a ton of success,” she said.

5. When does my portfolio start making money?

Show me the money, am I right? The scariest part of investing is risk and control. And like in all learning processes, positive reinforcement works best – especially if that reinforcement is money.

“Hopefully, your portfolio starts making money right away,” said Walsh.

“When you invest, you need to make sure you have a long-term view. No one can time the markets,” he added. “You could begin investing and the next day the market drops 10% or goes up 10%, there is no way to tell.”

6. How does investing affect my taxes?

Investing can have no impact on your taxes or it can have a lot.

“Investing in a retirement account, like a 401(k) or an IRA, will not have (much) impact for tax-deferred accounts,” Sipes said. “Whereas a $10,000 investment in Tesla last year that turned into $70,000 and was sold in less than 12 months could have a massive impact on short-term gains taxes coming into play.”

But fear not, capital gains taxes can usually be managed depending on how much and when you pull from your account.

So you made a bundle on GameStop:Get ready to pay the taxes

“If you hold your positions for more than one year, any gains are taxed at either a 15% or 20% capital gains tax rate depending on your tax bracket,” Walsh explained. “If you hold positions for less than one year, your gains are taxed as ordinary income.”

Everyone’s investing journey is different, but we all start out with the decision to make our money work for us. The entire process can be as complicated or as hands-off as you want. Only one thing remains constant for newer and experienced investors alike: It’s a risk.

Look for trusted help and don’t be afraid. We’re all “the market” in a sense so we all have the same chances to go up or down.

Josh Rivera is a Money & Consumer NOW editor at USA TODAY.

This column should not be considered financial advice. Contact a professional financial planner to determine if investing is right for you and how it fits into your personal finance goals. The views and opinions expressed in this column are the author’s and do not necessarily reflect those of USA TODAY.

News Related

OTHER NEWS

HBO shuts down Apple TV, forcing subscribers to upgrade to HBO Max

Photo by: Apple TV/Facebook HBO just shut down Apple TV on Thursday, July 22, and officially ended their integration that only started in May. Now subscribers will no longer be ... Read more »

Activision Blizzard sued by the state of California over discrimination, sexual harassment

Photo by: Activision Blizzard/Facebook Activision Blizzard that is known for its popular video game titles, including “Call of Duty” and “World of Warcraft,” has been sued by California's Department of ... Read more »

Consumer spending boom continues with 9% rise in May

Photo: Depositphotos.com Consumer spending soared by nearly 9% in May, but was still slightly down on April’s 9.7% rise, which itself was the biggest since World War II. However, the ... Read more »

Bankers expect bigger bonuses in 2022 as financial sector goes on Asia hiring spree

Financial services professionals in Asia are confident they will receive bigger bonuses in 2022 as banks and other institutions scramble to attract and retain talent in Asia, according to headhunting ... Read more »

DUG Drinks: World's first potato milk launched by Swedish vegan dairy brand

Photo by: DUG Drinks/Instagram DUG Drinks, a Swedish startup that produces vegan dairy products, just developed the very first potato-based milk in the world. The company has already launched the ... Read more »

Evergrande resolves debt dispute with Guangfa Bank after Hong Kong lenders withdrew mortgage loans to its apartment buyers

Heavily indebted developer China Evergrande said on Thursday that it resolved a dispute with a bank creditor that led to 132 million yuan (US$20 million) in its assets being frozen ... Read more »

At two years old, Shanghai's Star board is already bigger than Spain's capital market and shields investors from global tech rout

The Star Market, China’s Nasdaq-style board, which is celebrating its second anniversary, has emerged as a safe haven for investors seeking shelter from Beijing’s crackdown on technology companies. The board, ... Read more »

Hong Kong stocks snap three-day slump as oil firms rebound while Evergrande halts free-fall

Hong Kong stocks rose at the lunch break as Chinese oil giants advanced while shares of debt-stricken developer Evergrande surged in a relief rally. The Hang Seng Index rose 1.8 ... Read more »

China's yuan to become more influential part of the global financial system, survey shows

The Chinese yuan is on course to become a much more influential part of the global financial system with almost a third of central banks planning to add the currency ... Read more »

Indexes inch higher on Wall Street, preserving weekly gains

Major indexes edged higher on Wall Street after a day of muted trading, preserving their gains for the week. The S&P 500 emerged from a midday slump to end with ... Read more »

Intel raises full-year revenue forecast

Intel raised its annual revenue forecast on Thursday, focusing on its dual strategy of increasing in-house production as well as outsourcing to catch up with rivals. Intel, one of the ... Read more »

Macquarie Cloud Services achieves Azure Expert MSP status

Macquarie Cloud Services, part of Macquarie Telecom Group, has achieved Azure-only Expert MSP credentials. The company said it is the quickest and Australian partners has gone from inception to certification ... Read more »

Sophos buys UK network detection and response MSSP Braintrace

Sophos has purchased MSSP US-based startup Braintrace to get visibility into suspicious network traffic patterns, including encrypted traffic, without the need for man-in-the-middle decryption. The UK-based platform security vendor said ... Read more »

Collaboration software vendor Mural lands in ANZ, taps Robert Malkin as APAC boss

Digital workspace and visual collaboration software vendor Mural has hired Robert Malkin to lead its Asia-Pacific business. This marks the company’s launch into APAC, starting with Australia and New Zealand. ... Read more »

MNF Group closes $31m direct biz sale to Vonex

MNF Group has finalised its deal with Vonex for the sale of part of the company’s direct business for $31 million. The two signed the conditional term sheet on 7 ... Read more »

Wools of NZ, Primary Wool merger to go to farmer vote in November

About 2100 farmers will vote in November on a proposed merger between grower-owned export and marketing company Wools of New Zealand (WNZ) and Primary Wool Co-operative to form a fully ... Read more »

Covid 19 coronavirus transtasman bubble pause: Board of Airline Representatives pushes for wage help

An airline group says aviation businesses affected by the suspension of quarantine-free transtasman travel should be able to claim wage support. The Board of Airline representatives says the eight-week pause ... Read more »

Ingram's CloudBlue updates go-to-market program

Ingram Micro subsidiary CloudBlue has updated its ‘Go-To-Market (GTM) Fast-Track’ program, aiming to decrease time to market by 50 percent. Updates include virtual showrooms and greater insights, including access to ... Read more »

PUBLISH to make NFTs of national treasure of Korea, Hangul manuscript ‘Hunminjeongeum Haerye'

National Treasure No. 70, “Hunminjeongeum Haerye”. Credit: PUBLISH PUBLISH announced it has been contracted by Kansong Art Museum to implement the technical solution for the conversion of the Haerye Edition ... Read more »

Intel sales forecast implies rocky second half of 2021

Intel Corp said it still faces supply chain constraints and gave an annual sales forecast that implied a weak end of the year. The 2021 forecast of US$73.5 billion in ... Read more »

Mercedes plans to go all-electric by decade's end

Daimler AG’s luxury car brand Mercedes-Benz says it is stepping up its transition to electric cars, doubling the share of sales planned by 2025 and sketching out a market scenario ... Read more »

Sydney shrugs aside Covid-19, cooling measures and tensions with China to emerge as hottest luxury homes market globally

The absence of foreign homebuyers, including those from mainland China, in Australia’s property market has not prevented Sydney from copping the crown of being the world’s top prime property market, ... Read more »

Websites back up after brief global outage linked to Akamai

Many websites were briefly down in an outage sparked by a glitch in Akamai Technologies Inc’s systems, the second major disruption linked to the cloud company in about a month. ... Read more »

As floods hit Henan province, investors get respite with stocks spared from major sell-off

As Henan counts the huge economic damage from unprecedented flooding, stock investors are finding the market reactions far from disastrous as companies with operations in the central Chinese province ploughed ... Read more »

Debt-ridden electric vehicle maker Faraday Future loses Zhuhai government as a crucial investor ahead of US listing

Electric vehicle (EV) company Faraday Future failed to secure a crucial government investor ahead of its public listing in the United States, potentially crimping the debt-ridden carmaker’s expansion plans. The ... Read more »

Sin City Calling: How to book cheap flights to Las Vegas?

With the Coronavirus cases receding gradually and expensive fares no longer a roadblock for your next vacation, it's time to leave that couch behind and head out for a place ... Read more »

S. Korea's DHIC to invest additional $60 million in US-based NuScale Power

The investment in NuScale Power will enable Doosan Heavy to win more contracts to supply parts for SMRs. Doosan Heavy Industries & Construction Co. (DHIC) will invest US$60 million to ... Read more »

Korea Aerospace receives $240 million trainer jet order from Indonesia

 In 2012, KAI supplied 16 T-50 trainer jets worth $400 million. Korea Aerospace Industries Co. (KAI) has received a $240 million deal to supply six T-50 advanced trainer jets to ... Read more »

Luxury brands LV, Gucci, Balenciaga and Kenzo scramble to attract young S. Korean men

Luxury brands Louis Vuitton, Gucci, Balenciaga, and Kenzo are scrambling to attract South Korean men in their 20s and 30s, who are becoming major consumers. Louis Vuitton is opening another ... Read more »

Hong Kong’s MTR Corp should bear responsibility for shoddy construction at residential project, lawmakers argue

The MTR Corporation should be held responsible for a construction defect at a residential project atop a railway station in Hong Kong forcing the demolition of two blocks of flats, ... Read more »

HSBC, ICBC (Asia) among Hong Kong banks to stop offering mortgage loans for unfinished flats built by debt-stricken China Evergrande

HSBC, Industrial and Commercial Bank of China (Asia) and other major banks in the city have stopped offering mortgage loans for unfinished flats built by heavily indebted property developer China Evergrande ... Read more »

Melbourne's Intelli-Systems tapped to launch Schneider Electric's micro data centre-as-a-service in Australia

Melbourne-based UPS reseller and critical infrastructure solutions provider Intelli-Systems has launched Schneider Electric’s micro data centre-as-a-service in Australia. Developed specifically for the NSW Aboriginal Land Council, the offering provides micro ... Read more »

Hong Kong’s high business start-up cost fails to deter foreign companies seeking access to China’s breakneck growth pace

The high cost of starting a business in Hong Kong is unlikely to deter foreign firms from expanding into the city, because it serves as a gateway to the mainland ... Read more »

Tiffany & Co, Costco finally ends long-running lawsuit over counterfeit rings via settlement

Photo by: Rachael/Unsplash Tiffany & Co. and Costco reportedly settled their lawsuit that has been running for more than eight years already. The dispute between the companies was about some ... Read more »

Peloton unveils plans to venture into video game business

Photo by: Peloton/Facebook Peloton is a known American exercise equipment and media company based in New York City, and it seems that it is adding a new business to its ... Read more »

Taco Bell, Starbucks facing supply shortages

Photo by: Taco Bell/Facebook Taco Bell and Starbucks are reportedly hit with supply shortages. Based on the report, the popular chain outlets have notified customers that they are experiencing issues ... Read more »

Kia leads the auto market in S. Korea after recording an increase in city car sales

Photo by: Kia/Facebook Kia is leading in the Korean car market as its city car sales have increased. It was said that because more and more people are going for ... Read more »

LG H&H reportedly suspends young executive while bullying investigation against her is ongoing

Photo by: LG/Facebook LG H&H or the LG Household & Health Care reportedly suspended its youngest executive after she was accused of bullying in the workplace. The employee was only ... Read more »

8 Things You Might Not Know About Nicotine And Its Effects

(Image source: Unsplash) Here are some of the most interesting facts about nicotine and its effects, some of which you may not have even heard about before. Whether you smoke ... Read more »

Investment manager Morrison & Co names its third chief executive in 33 years

Morrison & Co, the investment manager best known as the manager of $5 billion infrastructure fund Infratil, has announced that Paul Newfield will become its new chief executive in January, ... Read more »