This week's challenge is look into / learn about non-retirement investing!
This is challenge 4 of 4 in the investing series.
Note: If you are outside of the U.S. be sure to research the equivalents in your country for the tools/suggestions mentioned throughout this investing series.
Investing outside of your retirement savings AKA non-retirement investing or general investing
This is basically when you invest your money outside of your retirement plan towards your other long term financial goals that you are 5 or more years away. There are several ways to get into general investing which we'll talk about below.
The key difference with investing outside of your retirement savings / general investing is that there are no limits or restrictions on how much you can invest or what you can invest in.
However, it is important to keep in mind that even though your investments are being made after taxes have been taken out of your income, you will still be liable to pay taxes on any earnings your investment makes.
So how do you get started?
The most popular ways to get started with non-retirement investing are:
- Working with a financial advisor to get guidance on how to invest your money
- Opening up an investment account with a major brokerage firm and investing on your own but having access to financial advisors as needed (in the US examples include Fidelity, Vanguard, Charles Schwab, Capital One Sharebuilder etc).
- Opening up an account with a robo advisory firm which is an online investment service that provides automated, algorithm-based investment portfolio management advice without the use of human financial planners or advisors (Examples in the US include Betterment, Wealthfront, Acorns, Stash etc).
A couple things to note
- Regular brokerage firms usually have required minimum amounts in order to open an account (between $500 to $2500) and high management and expense fees because of the human element involved.
- Robo advisors on the other hand, typically don't require any minimums to get started with investing, have minimal fees and they allow to you to make small contributions to build up your investment account. They can charge smaller fees because they use passive investing i.e. little or no human elements involved.
- You can also invest on your own using individual stocks etc but I don't recommend it unless you are highly experienced with the way the stock market works.
Should you use a robo advisor?
If you are trying to get started with non-retirement investing, a robo advisor is a great way to go due to their low and low costs. They also boast high levels of security when it comes to your personal information but keep in mind that since their investment recommendations are based on algorithms, they are not financial advisors - which means they cannot provide the level of input that an actual (human) financial advisor will provide you if you need to discuss your unique life circumstances of investment objectives.
Regardless of which approach you use - a financial advisor, investing through a brokerage firm or with a robo advisor, it is very important that you do your own research and have a basic understanding of what you are investing.
Also important to note
It's important to understand that your investments in the stock market are not guaranteed and neither are they insured, as a result, investing in the stock market means you are assuming risk. However, if you have the right objectives and a proper investment plan based on those objectives you should be just fine.
Be sure to reach out to a financial advisor if you have specific investing questions.
Your challenge this week is to review your investment objectives and overall finances and determine if non-retirement investing is right for you right now. Leverage the downloadable prep sheet to help you make that determination.
P.S. Don't forget to share your progress in the Facebook group!
It's week 18 of The 26 week savings challenge!
This week, your savings deposit amount is $72.00
(If you've been consistent with your deposits, this week's deposit will bring your balance to $667!)
- Make your transfer.
- Check off this week's amount on your savings challenge schedule.
- Share your progress in the Facebook group!
Note: This challenge will be on-going throughout this accountability program in addition to your other weekly challenges.