SheMade’s guide to beginner’s investing
By Hanin Najjar
Investing is a good way to build financial stability and to grow your wealth. The earlier you learn to invest, the more financial potential you will have in the long run. But we know that investing can be a little daunting. If you’ve been thinking of investing, take this as your sign to learn and build a healthy financial future for yourself.
Investing is not so intimidating once you learn the basics of how everything works. Here are a few things you need to know before you start investing.
When should I start investing?
Before you can think about putting your money into an investment, you should have a few things.
Get a steady income
To invest wisely and grow your wealth, you first need to have a job with a steady income, any job with any income as long as you have money coming in and all your expenses are covered.
Pay off credit card debt
Interest on credit cards is really high. Even if you are making money on the stock market, you’re probably losing more to credit card companies. Pay off your credit card debt before you put your money in an investment.
Build an emergency fund
Take some time to save 3-6 months’ worth of expenses and leave them in your bank. Don’t touch this money unless you have an emergency like losing your job, your car breaking down or booking a plane ticket to see a sick loved one. Once you have money for emergencies, you can start investing. You should NOT invest money that you will need to pay bills.
After you have all of these things done, think about how much money you are willing to invest. If you have more responsibilities like kids, you may want to invest less and keep more cash handy for unforeseen expenses. If you’re single you may be able to invest more of your paycheck. Decide how much money you want to put aside money each month to invest.
What are the different types of investments?
Now that you’re ready financially, you should know what kinds of investments there are out there. There are several different types of investments but here are the important ones:
Stocks: When investing in stocks, you invest directly into a company on the stock market. This means you own a small part of the company. If it does well, so do you, but if it tanks, you go down with it.
Exchange Trade Funds (ETFs): ETFs are basically a group of companies. So instead of investing in one company, you invest in a group of companies. Often, ETFs are grouped by sector, so you will have an ETF that is filled with energy companies, or tech companies, or health companies. These investments are safer but grow a lot slower than other stocks.
Note: Many popular ETFs invest in weapons, to check if the ETF you want to invest in has money in weapons trade, check out its score on weaponfreefunds.org.
What kind of investor are you?
There are two different types of investors, the passive investor that puts money into investments and forgets about it, letting it grow over time, and the active investor who pays attention to the news, politics and the economy to make decisions on stocks.
If you are a passive investor, then investing in big companies, ETFs and within a retirement fund may be the best option for you. Investing long term is beneficial because you will not have to worry about recessions and politics. Over time the stock market will grow and so will your investment, but you have to be willing to part with your money for years, maybe even decades.
Get started investing
Learning about investing is one thing — actually starting is another. If you've read this far and you're ready to take that next step but not sure where to begin, the She Builds Wealth course was made for exactly where you are right now. She Builds Wealth is a beginner-friendly financial literacy course that will teach you how to invest, protect yourself financially, and achieve financial freedom. Curated for women of color, you'll learn how to build generational wealth for those you love and for your community.
Learn more about She Builds Wealth here →
Header photo by Liza Summer via Pexels
*This information is not financial advice and is meant to provide general information for educational purposes. All investments involve risk and you should conduct your own research to make the best decisions for yourself.
