#HANDS OFF INVESTING HOW TO#

Think of it this way - the stock market has historically produced returns of 9%-10% annually over long periods. It's also a smart idea to get rid of any high-interest debt (like credit cards) before starting to invest. While this is certainly a good target, you don't need this much set aside before you can invest - the point is that you just don't want to have to sell your investments every time you get a flat tire or have some other unforeseen expense pop up. Most financial planners suggest an ideal amount for an emergency fund is enough to cover six months' worth of expenses. The emergency fund is your safety net to avoid this. All investments, whether stocks, mutual funds, or real estate, have some level of risk, and you never want to find yourself forced to divest (or sell) these investments in a time of need. This is cash set aside in a form that makes it available for quick withdrawal. One important step to take before investing is to establish an emergency fund. The amount of money you're starting with isn't the most important thing - it's making sure you're financially ready to invest and that you're investing money frequently over time. We also have great ideas for investing $1,000. You may think you need a large sum of money to start a portfolio, but you can begin investing with $100. Your budget How much money do you have to invest? Potential for huge, life-changing returnsĭig deeper: Active vs Passive Investing 2.You do the investing yourself (or through a portfolio manager).More work, more risk, more potential reward For example, you could hire a financial or investment advisor - or use a robo-advisor to construct and implement an investment strategy on your behalf.

In a nutshell, passive investing involves putting your money to work in investment vehicles where someone else is doing the hard work - mutual fund investing is an example of this strategy. You'll still get good results over the long run, and the effort required is far less. On the other hand, passive investing is the equivalent of putting an airplane on autopilot versus flying it manually. Active investing certainly has the potential for superior returns, but you have to want to spend the time to get it right. And since passive investments have historically produced strong returns, there's absolutely nothing wrong with this approach. Desire: Many people simply don't want to spend hours on their investments.

#HANDS OFF INVESTING HOW TO#

You should at least be familiar with some of the basics of how to analyze stocks before you invest in them. Knowledge: All the time in the world won't help if you don't know how to analyze investments and properly research stocks.You'll need to research investment opportunities, conduct some basic analysis, and keep up with your investments after you buy them. Time: Active investing requires lots of homework.To successfully be an active investor, you'll need three things: If you plan to buy and sell individual stocks through an online broker, you're planning to be an active investor.

But your lifestyle, budget, risk tolerance, and interests might give you a preference for one type.Īctive investing means taking time to research investments yourself and constructing and maintaining your portfolio on your own. We believe both styles have merit, as long as you focus on the long term and aren't just looking for short-term gains. The investing world has two major camps when it comes to the ways to invest money: active investing and passive investing. Your style How much time do you want to put into investing your money?

Hands off investing