Investing in the stock market is, for many people in their 20s, a long-off dream, along with owning a home and having a proper portfolio of assets (i.e., one that doesn't just involve that Tiffany necklace you got for your 21st birthday). Many of us dream of having a nest egg and enough financial security to invest in businesses and ideas that we think are going to go somewhere, but contrary to popular belief, you don't need to have tons of cash to start investing. What you do need is one solid piece of advice to get you started.
"There are a few steps someone should take to determine that they are ready to invest," Alice McElhaney, founder of She Spends, an online community dedicated to helping people increase their financial literacy, tells Bustle. "If they have credit card debt, they should pay it off. They should also know the interest rates on their student loan debt and mortgage, if they have either of those."
From there, though? The one thing you should know before starting to invest, says McElhaney, is that it's a good idea to go slow — and make sure you're ready before you take the plunge. McElhaney says it's important to feel in control of your financial situation, for starters, and that includes not just paying off debt, but making sure you have enough cash around to help you if you get into trouble. "Have an accessible store of cash in a high yield savings account for immediate emergencies," she tells Bustle. Car accident, pet emergency, medical bills: you need to cover those before you can go forth and dabble.
If you're feeling anxious about the stock market, she says, it's also not a bad idea to look close to home. "One awesome way to start investing," McElhaney tells Bustle, "is through a retirement account like a 401(k) or a Roth. These are often offered by your employer, who sometimes matches your contribution up to a certain percent. So, if your 401(k) match is 4 percent, you should put 4 percent of your salary into your 401(k), and your employer will do the same. That's free money from your employer!" 4 percent might not seem like much, but it adds up a lot over time.
Rather than diving headlong into stocks and shares, McElhaney tells Bustle that you should get a retirement account set up first. "Then you can look to other types of investing," she says. Complete novice? You're not alone. Some people are introduced to the stock market young, as with app BusyKid, which allows kids to buy tiny amounts of shares and invest their allowance in stocks, but many others aren't very familiar with it. Again, McElhaney tells Bustle it's a good idea to go slow and get help.
"If you want to buy individual stocks — which we don't really recommend -- you can use the Robinhood app," she says. "If you're interested in index funds, which are basically groups of stocks and bonds, you can look to a robo-advisor, which trades for you. The robo-advisors charge a fee, which should be no more than 0.25 percent." It's worth doing a lot of research into the right robo-advisor for you, or hiring a physical person who can manage things for you, if that's accessible to you. "You can also buy index funds yourself using a tool like Vanguard or Fidelity," says McElhaney. "The fees will be lower, but you'll have to rebalance these investments over time." Less money you have to spend, but more work for you. And that might not be a good idea if you're aren't quite ready to take the plunge.
If you're not sure stocks and shares will ever be your style, don't worry. Financial insecurity means that up to 66 percent of today's millennials think their future lies in their savings accounts, not any future investments, according to CNBC. Which is all the more reason to make sure that, if you do decide to take the plunge, you do it in the proper way.