Investing: A Comprehensive Guide to Getting Started

Investing is a crucial step towards financial independence and long-term wealth. However, many people are unsure about when and how to start. At O1ne Mortgage, we believe that everyone should have the opportunity to invest, regardless of their income level. If you have any questions or need assistance with your mortgage needs, feel free to call us at 213-732-3074. Our team is here to help you navigate the complexities of investing and home ownership.

Is There an Income Requirement to Invest?

One of the most common misconceptions about investing is that you need a high income to get started. This is simply not true. There is no minimum income requirement to begin investing. When you open a brokerage account, brokers will ask for personal information such as your annual income and employment status. This is primarily for regulatory compliance and does not restrict your ability to invest. Whether you earn a modest salary or have a significant income, you can start investing today.

When to Start Investing

The best time to start investing is as early as possible. If you have access to an employer-sponsored retirement plan like a 401(k), especially if your employer matches contributions, take advantage of it. You don’t need to contribute a large portion of your paycheck initially. Aim to save at least as much as your employer will match. Financial experts recommend saving 10% to 15% of your pre-tax income for retirement. This should be your long-term goal.

If you don’t have access to a 401(k) or 403(b), consider opening an individual retirement account (IRA). There are various options available, including those tailored for self-employed individuals. The types of investments you choose will depend on your age and risk tolerance. The key is to start early and contribute consistently to benefit from compound interest.

Looking Beyond Retirement Plans

Investing outside of retirement accounts can be more complex. It involves risk, and you need to ensure you have a solid financial foundation before diving in. Here are some indicators that you might be ready to invest:

• Manageable Debt: If you have some debt, such as student loans or credit card debt, it’s okay to invest as long as your payments don’t consume a significant portion of your income. Having a plan to become debt-free is also crucial.
• Budgeting: Keeping track of your income and expenses is essential. Ensure you have some savings left at the end of the month to set aside for investments.
• Emergency Fund: An emergency fund covering three to six months of basic expenses is vital. This ensures you won’t need to dip into your investments for unexpected expenses.
• Other Financial Goals: Investing is important, but so are other financial goals like buying a home. Prioritize your goals and allocate funds accordingly.

Tips for Investing When You Don’t Have Much

Even if your income is limited, you can still invest wisely. Here are some tips to get you started:

Focus on Retirement

Retirement accounts are a great place to start. You can learn about investing by examining the fund options in your 401(k) or IRA. Alternatively, you can opt for a target-date fund for a more hands-off approach. Investing in your retirement fund is a smart move, even if it’s the only place you invest initially.

Choose Low-Cost Accounts and Instruments

There are numerous low-cost options for first-time investors. Consider brokerage accounts or robo-advisors with no fees and low account minimums. Exchange-traded funds (ETFs) and index funds are excellent choices for diversifying your portfolio without high costs.

Select Your Account Strategically

If you have limited funds, choose an investment account that serves multiple purposes. For example, a Roth IRA allows you to withdraw up to $10,000 for the purchase of your first home without a penalty. This way, you can save for retirement and a home simultaneously.

Knowing When You’re Ready to Invest

The best time to start investing for retirement is now. However, investing for other goals requires careful consideration. Assess your financial health, including your emergency savings and debt levels. Determine an amount you can comfortably invest and explore low-cost, low-barrier options like ETFs or robo-advisors. Investing doesn’t have to be daunting or require a lot of money. With the right approach, you can start building your financial future today.

At O1ne Mortgage, we are committed to helping you achieve your financial goals. Whether you’re looking to invest or need mortgage services, our team is here to assist you. Call us at 213-732-3074 for personalized advice and support. Let’s take the first step towards a secure financial future together.