If you’re new to investing, these tips are exactly what you need.
- Humphrey Yang recommends that before you start investing, you pay off high-interest debt and have an emergency fund.
- He suggests investing in index funds or ETFs. If you want to be a more active investor, you can also add in some stocks that you like.
- Keep a long-term perspective when investing, and avoid trying to time the market.
Investing is a smart financial habit, as it’s one of the most reliable ways to build wealth. But getting started can be confusing and even a bit intimidating. There are all kinds of investment options available, and when you’re putting your own money on the line, you don’t want to choose wrong.
Former financial advisor Humphrey Yang has published several videos on how to start investing. These have plenty of valuable advice, so here are his best tips for first-time investors.
Have your financial bases covered first
It’s natural to be excited about jumping into investing and starting to grow your money. One important piece of advice from Yang is to have your bases covered financially first. There are two things he recommends doing:
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- Pay off your debt. Specifically, make sure you get rid of high-interest debt, such as credit card debt. Debt with low interest rates don’t necessarily need to be paid in full to start investing — Yang says this is a judgment call.
- Establish an emergency fund. This should have at least three to six months of living expenses.
Completing these steps ensures you’re in a good position to invest. If you’re paying, say, 18% interest on your credit cards, paying those off would be a better use of your money right now than investing. And every adult needs emergency savings. If you decide to invest your money instead, you may be forced to sell those investments to cover any unplanned expenses.
Invest in index funds or ETFs
Yang provides plenty of advice on investing in stocks. However, he also says that “for an average or a beginner investor, if you stay away …….