Get Starting Frequently Asked Questions

• First, you must keep an emergency fund. There are exceptions, but only one applies at the beginning – getting an employer plan (such as a 401(k)) match. This doesn’t necessarily apply if your emergency fund is particularly low.
• Next, you must know what you’re investing in. Take the time to do some reading. Here are some of r/investing’s favorite books you can start with. You should be able to get most of these at your library.
• Then you must make an informed decision about what kind of investing you are interested in – whether you are going to pick stocks, go with an investment manager (either directly or through a mutual fund), or be an index investor. Each has different upsides and downsides (FAQ section on the differences forthcoming! -ari)
• The next step is to determine your goal. An investment that would be fantastic for a twenty five year old earmarking some money for retirement would be terrible for someone who aims to save for a new car in five years.
• You must (of course) have the money to invest.

Read about investing. Seriously, read! This site in particular was created to help beginners get started. Educating yourself will be the best investment you can make.

Do not put money into the stock market that you need back in a short time period. The only safe places for that money are a savings account or cash equivalents (such as a money market account).

We realize you’d like more return than what your savings account will be paying, but if you need the return of principal, you cannot risk it in the stock market over such a short time horizon.

1. Consider how much you have: http://lazytraders.com/insights/starting-out-i-have-x-dollars-what-should-i-invest-in/
2. No matter what, keep an emergency fund: http://www.wisebread.com/figuring-the-size-of-your-emergency-fund
3. If this is for the long haul, here is a start-up kit: http://www.bogleheads.org/wiki/Bogleheads%C2%AE_investing_start-up_kit
4. Also note the advantages/disadvantages of different retirement account types: http://en.wikipedia.org/wiki/401%28k%29_IRA_matrix
5. Still have questions? Great! But before anyone here can give you a helpful answer, we need to know more.

There are a few important questions that need to be answered before a suitable answer can be give. If you are 24yrs old and just won $50,000 in a lottery, the responses will be a lot different than if you are 62yrs old and just lost your job.

How old are you? What are your objectives? What is your risk tolerance? What is your time horizon? Do you need this money for anything any time soon? (Eg home purchase, kids, car, school) Are you interested in a passive, long-term approach (‘set and forget’) or a more active day-trading strategy?

As you can see, there are a lot of questions that need to addressed before a suitable answer can be given. If you have an expense or a purchase you are making soon (house, car, University fees), it is inadvisable to but putting your money into risky assets like stocks. If you want a set-and-forget solution, a simple set of indexed mutual funds in a lazy portfolio might be your best bet: http://www.bogleheads.org/wiki/Lazy_Portfolios

As you learn about investing, you’ll see there are different style types. Some of them take many hours per week for those who choose to go this route; others take mere minutes per month. In addition to the risk factor of your portfolio, you’ll have to decide how much time you want to put into your investing, and make that part of your decision.