I often get questions from friends and family about investing, so I put together this summary to help explain why it’s important and how to get started. I wish I had started earlier, but better late than never. Let me know if I’m missing anything before I share this with them.
Why investing matters
Over time, markets have historically given annual returns of 7-10%, despite short-term ups and downs. For example, since I started investing in 2018, my portfolio is up 60%. During the March 2020 dip, I invested more, and those investments have since doubled. Investing isn’t just for the wealthy—it’s about starting small and letting your money grow.
Getting started
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Build an emergency fund: Save 3-6 months of living expenses in a high-yield savings account to protect against emergencies. Leaving cash in a regular account means you lose about 3% a year to inflation.
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Choose a strategy: Beginners might start with globally diversified funds like VT. I personally favor the S&P 500 (VOO) and small-cap value stocks (AVUV), with some international exposure (IXUS/IGRO).
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Pick a brokerage: I recommend Fidelity for its features like fractional share purchases, cash-back credit cards, and Roth IRA options. Automating investments makes it easier to stay consistent.
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Maximize rewards: Use credit cards with good rewards (like Fidelity’s 2% cash-back card) to help fund investments and avoid using debit cards for purchases.
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Make a plan: Write down your financial goals and allocate investments accordingly. Keep a portion in cash for emergencies and rebalance as needed.
Recommended resources
For videos, Ben Felix is great. For books, check out The Intelligent Investor by Benjamin Graham. Stick to your plan, and you’ll be on the path to financial independence.
“This is not financial advice—I’m just a mechanic.”