Investing 101: Options for Getting Started

When you think of investing or investors you probably picture Wall Street suits or high-profile venture capitalists. The truth is that you don’t need millions of dollars in order to invest and there are many opportunities beyond picking stocks or funding start-ups. Today there are a number of ways to invest your money and get returns on it.  Additionally, while no investment is without risk, having a diversified portfolio can help prevent you from losing your shirt.

401ks, IRAs, and Roth IRAs

If you don’t have a 401k or other retirement account, stop reading this and go open one. One of the best investments you can make is in your own retirement and 401ks are a great way to do that. In addition to the returns you can get from the invested funds of your account many employers will offer to match your 401k contributions up to a certain percentage. This should be your absolute first stop on the road to investing.

Those who want to further invest in their retirement may want to consider IRAs or Roth IRAs. Both are also retirement accounts but are usually independent from your workplace (although you can rollover your employer 401k to an IRA or Roth IRA should you leave that company). A regular IRA allows you to make contributions and subtract that money from your taxable income. On the other hand, with a Roth IRA, you pay the taxes upfront but then don’t have to pay taxes on the withdrawals you make once you reach retirement. It may be worth speaking with a professional to decide which option is best for you.

Understanding the Stock Market

Despite how much of our economy revolves around the stock market the average person probably has little idea how it works or how to get in on it. Part of this may stem from the days when buying and selling stocks required a broker — an actual person who you’d need to call to execute orders. However now there are many platforms such as eTrade or apps like Robinhood that allow you to buy and sell stocks right from your computer or even your mobile phone.

One thing you’ll probably notice very quickly is that the stocks of companies you’ve heard of can be pricey. For example Alphabet (Google’s parent company) is currently selling for more than $700 a share while Disney is far cheaper at $100. The good news is that you don’t need to buy a ton of shares in order to invest. Just keep in mind that, depending on the broker or stock trading platform you use, you may incur fees for that may offset your returns.

In addition to owning stocks you can also purchase what are known as options. There are two basic types of options: puts and calls. Stated simply owning a put gives you the option to sell a stock at a predetermined price and a call gives you the option to buy at a certain price. Buying and selling puts and calls can be very beneficial if done correctly but that’s a lesson for Investing 201 😉

Other Ways to Invest

If the stock market isn’t for you there is still hope. The FinTech movement has brought with it several new ways to invest your money. One such example is peer to peer lending.

Peer to peer (P2P) lending matches up borrowers in need of loans with investors willing to contribute. What’s in it for them? Investors on platforms like Lending Club receive a cut of the interest that the borrower will pay on the loan over time.

Investing in P2P can be a great option for beginners for a number of reasons. First it’s easy to manage your risk by choosing to lend only to borrowers with strong credit scores. Additionally Lending Club allows investors to put as little as $25 towards any given loan, further diversifying your investment and your risk.

Investing isn’t just for the super rich. In fact nearly everyone should invest their money in some way. Whether that means having a 401k, buying a few stocks, or looking into other options there are plenty of opportunities to get your money working for you. Class dismissed.


Jonathan Dyer

I'm a small town guy living in Los Angeles looking to make solid financial decisions. I write for a number of finance websites, including HuffingtonPost and Business2Community. I founded in 2015 to focus on personal finance and the emerging FinTech markets.

Other Articles by Jonathan Dyer

Bilt Rewards Launches Travel Portal with Benefits for Cardholders

Last year, the startup Bilt made a splash when it announced a new service that would reward users for paying their rent. That premise was then expanded upon with the launch of the Bilt Mastercard, which is issued by Wells Fargo. Now, continuing to capitalize on both the hype of their product and the demand for travel, Bilt has debuted another new offering for customers. This week, Bilt Rewards announced...

Cash App Introduces Round-Up Investing Feature for Debit Card

Debit card customers looking to grow their investments gained a new, automated option today as Block Inc. (formerly Square Inc.) officially announced a new feature for its popular Cash App. Now, customers with the Cash App Cash Card can opt into Round Ups as a means of growing their investments. When this feature is toggled on, Cash App will round up debit card purchases to the nearest dollar and invest...

Marqeta Expands Credit Program with New APIs and More

A FinTech that specializes in creating credit card experiences is rolling out some new features. This week, Marqeta announced what it calls a "significant expansion" of its credit platform. This includes more than 40 new credit APIs that will further help clients craft and launch their own credit card products. Additionally, the company notes an updated intuitive dashboard. Using this platform, businesses can create unique card options that can not...