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Your Financial Takeover Starts Here
You’re here because you want your money to work for you, right? Let’s start you on the financial independence journey with these 3 easy steps to making passive income.
Reach Financial Freedom with Passive Income by Investing Your Money with this 3 Step Guide
Why You Should Invest Now?
If you have yet to hear, investing is a super crucial aspect of your wealth-building journey. You may be looking to invest your money for retirement or grow a dividend portfolio for extra income, etc.
Whatever your goal is, the age-old saying, “time in the market” is better than “timing the market” stands true. So what that means is you should get started yesterday.
It’s easy to leave your money to sit in the bank to collect dust and lose its value. However, you should consider putting your savings to work and outpace inflation by earning returns on your hard-earned money.
You want to take advantage of your potential to grow by giving yourself time. Time to grow. There are many methods of investing and many platforms out there to do so.
I love teaching people to start investing and getting into the nitty-gritty of it all. But I also know that not everyone has the time to do the research. And that is okay! We only have so much time to dedicate daily that sometimes investing, despite its significant role in your financial growth, is not at the top of the priority list.
That’s why I am here to provide you with my 3 easy steps to start you on your investing journey, in turn, saving you time and money.
3 Easy Steps for Beginners to Reach Financial Freedom and Retire Early
STEP 1: Open Up a Brokerage / Retirement Account
This is truly the easiest first step. Decide whether you want to open up a regular brokerage account or a retirement account in which you are not allowed to make withdrawals until the age of 59 ½ otherwise, you’ll be subject to paying penalties.
Consider starting with a regular brokerage account if you already have a retirement plan with your employer. You can contribute any amount you want without limits.
You can sell your securities (investments) and withdraw at any age without a penalty. You will be taxed on your capital gains (profits earned) if and when you sell. But if you sell at a loss, that loss can be used as a tax deduction. It is typically recommended to play the long game though so keep your money invested as long as you can.
If you want to open a retirement account then you have a few options.
You can open a Traditional IRA (Individual Retirement Account). This is known as a tax-advantage account because the money you contribute is not taxed as part of your income for that year. There is a maximum contribution limit for 2024 of $7,000 if you’re under 50 and $8,000 if you’re over 50. Pretty nifty way to save some money right now. But come time to make withdrawals at age 59 ½ and on, you will have to pay taxes on your gains based on your tax bracket at the time you withdraw.
The opposite stands true with a Roth IRA as it is a taxable account. If you think you’ll be in a higher tax bracket when you withdraw past the age of 59 ½ then consider investing in a Roth IRA now because it will be tax-free later when you withdraw and those capital gains won’t count towards your income.
You can contribute higher amounts into a SEP (Simplified Employee Pension Plan) IRA and Solo 401K if you are self-employed.
Pick your account type but don’t get too caught up in deciding because the benefits are there regardless.
Some of the brokerage accounts out there include the following:
- Fidelity
- Vanguard
- Charles Schwab
- Wealthfront
- Betterment
- Robinhood
There are other options to choose from aside from this list. I typically look to choose a brokerage platform that is trusted, has a user-friendly interface, and has low or no fees.
Once you decide on which brokerage to use, sign up for the type of account you want, i.e. Traditional IRA.
The application is easy to fill out. It requires personal identifying information as well as employment information. Give it a day for the application to be reviewed and approved.
Once it’s approved, link your bank to make money transfers.
This is an easy 1st step! Get this out of the way and let’s move on to Step 2.
STEP 2: Deposit Your Money!
Okay, I thought Step 1 was simple but Step 2 is even easier. All I suggest here is for you to take that tiny leap you’ve been so nervous about. That leap you need to take to start this entire journey that you put off for so long. That leap does not require anything but a few mouse clicks.
Here’s what you do. Allocate a specific dollar amount you want to invest every month towards your brokerage or retirement account and automate it. That’s right you can make recurring transfers to fund your account.
If automation sounds scary, I get it. But we are trying to get you to stick to this path you’ve been attempting to get on for so long. Automating your investments helps you stay on track.
*Now I only suggest automating your investments as long as it will not jeopardize your bank account and leave you in the negative.*
We are already done with Step 2. But before we move on, I want to encourage you to be generous with your investment amount each month. Doing so will help you reach financial independence a lot sooner.
Of course, don’t neglect the essential bills that keep a roof over your head and food on the table. Dedicating a certain amount to your investments every month will force you to be mindful of your spending. Rather than using that money to spend freely on non-essentials.
You got this! Step 2 achieved! Let’s keep it moving.
Keep reading for my Top 10 investment picks!
STEP 3: Put your money to work and make your first Investment!
Now comes the fun part. Here you get to put your money to work finally.
Let’s get you comfortable with investing and help you understand your options. It can be intimidating as it almost seems like a completely different language when you first approach investing. You might wonder where to even begin.
Take this step and start, then you will find everything begins to piece itself together. The thought of having to learn everything first and then act later is overwhelming. It leads to procrastination.
Reading through this article is enough to begin to make a move. So take Steps 1, 2, and 3 and after that, you will find terminology will start to become familiar, and things will start to make sense, you’ll get more comfortable with navigating this unfamiliar territory.
I like to suggest looking into investments called ETFs (Exchange Traded Funds).
A stock is an individual company that is sold on the stock exchange. An ETF is a bunch of companies/stocks wrapped into a fund. So you can invest in an ETF that has tens, hundreds, or thousands of stocks.
Investing in an ETF can be a safer choice for beginner investors as it can be considered less risky since it has a bunch of stocks giving you diversification with usually less volatility.
Regardless of whether you pick an ETF or stock you still need to take the time and do your research to make a sound decision. But compared to an ETF, with a stock you are relying greatly on the prosperity of one individual company to see returns.
The content in this post is for informational and educational purposes only. It is not intended as financial advice, and you should consult with a licensed financial advisor before making any investment decisions.
Learn in detail how I choose my stock market investment picks by subscribing to the email list below.
Here are a few examples of ETFs that are often discussed in the investment world. Remember that each investor’s situation is different, so do your own research and determine if these fit your personal investment goals.
Without further ado, here is a list of 10 ETFs. They are ranked by price from low to high:
- XLG (Invesco S&P 500 Top 50 ETF)
- RSPN (Invesco S&P 500 Equal Weight Industrials ETF)
- SPYV (SPDR Portfolio S&P 500 Value ETF
- SCHD (Schwab US Dividend Equity ETF
- SCHG (Schwab US Large-Cap Growth ETF
- FIW (First Trust Water ETF)
- VYM (Vanguard High Dividend Yield Index Fund)
- FTEC (Fidelity MSCI Information Technology Index ETF)
- FDVV (Fidelity High Dividend ETF)
- SPYV (SPDR Portfolio S&P 500 Value ETF
Don’t let these odd letters bunched together scare you. They are what is known as the Ticker Symbol, a 1 to 5-letter abbreviation for the name of the stock or fund.
What I have listed here are Exchange-Traded Funds, provided as educational examples. Remember what I said earlier, they each hold many stocks within their fund to give you broader exposure to the stock market, allowing for less risk. Understand however, past performance is not indicative of future results, and all investments carry inherent risks. Make sure to assess each fund carefully and consult a financial advisor if needed.
I’m not a licensed financial advisor, and the information I share is based on my personal research and experiences. Please make sure to seek advice from a professional if you’re unsure about your investment choices.
All you have to do is log on to your new account whether it be an individual brokerage or retirement account, and type in the Ticker Symbol in the search bar. It will provide you with information on the fund.
Or you can always input the ticker symbol into Google to get an overview of the fund you’re researching.
Once you feel comfortable with your pick, once you’ve done your own research or consulted a financial advisor, search the ticker symbol of the ETF in your account and click on “Buy”. You will have the option to buy the ETF in “dollars” or “shares”.
You should have a specific dollar amount you’re comfortable investing. Remember to consider the option of making this a “recurring” investment as it keeps you on track by being consistent.
There are many more ETFs, familiarize yourself with what is out there and what will suit your financial needs.
So what are you waiting for? Find the right investment pick for you. Click “Buy” and you will not only have invested in the stock market but also your financial future.
You just 1) opened up your new brokerage account, 2) linked your bank and deposited your money, and 3) bought your first ETF.
Congratulations on taking these 3 super simple steps. This step-by-step guide is only the beginning to get you on the road to your Financial Takeover.
I will help you learn the tools you need to make better financial decisions, improve your money-management skills, and get you on the path to retiring early and enjoying financial independence.
I care to make this a fun journey rather than a restrictive one but that takes being mindful, practical, and intentional with your financial habits.
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Until next time,
The Financial Takeover
