Uploaded October 2020 | Updated September 2026, 2 weeks ago
Here's a video about how and where to invest for beginners in 2021! What is an investment? Why do we need to invest? And 5 easy ways you can start or continue investing today as a regular, non-millionaire person! Millionaires still welcome too. From Hawaii, mahalo for watching. Feel free to add me on instagram too: @kikoga
What is an investment?
I think of an investment as a sacrifice you make in order to improve your current situation. Investments are usually referred to in more financial terms, you sacrifice money in the hopes whatever you are trading it for is worth more than you paid for in the future. But investments are also behavioral as well, like trading your time to read a book about finances, trading your time to run a couple miles every day to improve your health.
Why do you need to invest?
On the behavioral side, it’s more intuitive. Of course we all want to improve every day. But for money, why can’t I just save your money and let it pile it up in my savings account? Every year, a thing called inflation slowly eats away at the purchasing power of your money. Inflation exists because it keeps people spending and/or investing their money. If people assume things will be more expensive in the future, they will tend to spend now and that keeps the economy churning. So you need to invest in order to outpace the rate of inflation so your dollar doesn't lose value.
THE 5 WAYS WE CAN ALL TRY TO INVEST TODAY
1. Employer 401K/Pension Plan
In these plans, money can be taken directly out of your paycheck before tax and invested in a fund that is managed by a third party. In the 401K and pension plans the employer can and should make contributions as well based upon your employee benefits. The intent is for these investments to grow over time to provide you an income at retirement from the investment and gains over your career. Take advantage of the free money your employer is giving you for retirement and make sure you ask about your benefits if you are unsure.
2. Roth IRA
A Roth IRA is another way to invest that helps you from a tax perspective. With the 401K you are taxed on your investment when you withdraw it at retirement, but with the Roth IRA you are taxed prior to investing. This helps if you are assuming you are going to be in a higher tax bracket when you retire, so it makes more sense to take the tax hit now. The money in a Roth IRA can be managed similarly to just investing in stocks, it just gives you the tax benefit at the beginning.
3. Stocks, Mutual Funds and Index Funds
If you choose to invest in individual stocks, my feel is that you need to know the companies worth and potential growth before you even look at the price. There’s more research and understanding that needs to occur with individual stocks since all your money is tied up in single entities leading to more risk. Watching prices go up and down and trying to time your money is not investing. Sure, yes there will be times when you make money and there are some one hit wonders out there, but over time you will likely get exposed.
So mutual funds will be similar to the funds you have in your pension or 401K plan, but because they are managed by a professional, there are higher fees to buy into the fund. Personally, I stay away from mutual funds not only because of the fee, but also because I have heard stories from people in the industry about how those professionals are paid. Not all portfolio managers are paid by the performance of their funds, but more by which companies they push into their funds. So their own financial gain is not always necessarily tied to yours.
So I tend to shift towards index funds. Index funds take less management since the stocks are not as “custom picked” as mutual funds which means they have low management fees to invest. Probably the most famous index fund is the S&P 500 Index which averages an 8% return per year, and will likely over a long period of time give you the gains you would like and more.
4. Real Estate
So the first few things I talked about are relatively easy to start with a relatively small amount of money. With real estate, you’ll need a larger sum of money to get started due to a downpayment that is required to purchase the home. You will need to do research on similar properties in the value and understand the location to make sound decisions on value for your property investment.
5. Yourself
The only investment no one can take away from you. Read, educate yourself, find mentors and continuously improve to help mold yourself in the person you want to be. Keep coming back to the channel for more!
Sources:
fool.com/the-ascent/banks/articles/does-average-american-save-money
Here's a video about how and where to invest for beginners in 2021! What is an investment? Why do we need to invest? And 5 easy ways you can start or continue investing today as a regular, non-millionaire person! Millionaires still welcome too. From Hawaii, mahalo for watching. Feel free to add me on instagram too: @kikoga
What is an investment?
I think of an investment as a sacrifice you make in order to improve your current situation. Investments are usually referred to in more financial terms, you sacrifice money in the hopes whatever you are trading it for is worth more than you paid for in the future. But investments are also behavioral as well, like trading your time to read a book about finances, trading your time to run a couple miles every day to improve your health.
Why do you need to invest?
On the behavioral side, it’s more intuitive. Of course we all want to improve every day. But for money, why can’t I just save your money and let it pile it up in my savings account? Every year, a thing called inflation slowly eats away at the purchasing power of your money. Inflation exists because it keeps people spending and/or investing their money. If people assume things will be more expensive in the future, they will tend to spend now and that keeps the economy churning. So you need to invest in order to outpace the rate of inflation so your dollar doesn't lose value.
THE 5 WAYS WE CAN ALL TRY TO INVEST TODAY
1. Employer 401K/Pension Plan
In these plans, money can be taken directly out of your paycheck before tax and invested in a fund that is managed by a third party. In the 401K and pension plans the employer can and should make contributions as well based upon your employee benefits. The intent is for these investments to grow over time to provide you an income at retirement from the investment and gains over your career. Take advantage of the free money your employer is giving you for retirement and make sure you ask about your benefits if you are unsure.
2. Roth IRA
A Roth IRA is another way to invest that helps you from a tax perspective. With the 401K you are taxed on your investment when you withdraw it at retirement, but with the Roth IRA you are taxed prior to investing. This helps if you are assuming you are going to be in a higher tax bracket when you retire, so it makes more sense to take the tax hit now. The money in a Roth IRA can be managed similarly to just investing in stocks, it just gives you the tax benefit at the beginning.
3. Stocks, Mutual Funds and Index Funds
If you choose to invest in individual stocks, my feel is that you need to know the companies worth and potential growth before you even look at the price. There’s more research and understanding that needs to occur with individual stocks since all your money is tied up in single entities leading to more risk. Watching prices go up and down and trying to time your money is not investing. Sure, yes there will be times when you make money and there are some one hit wonders out there, but over time you will likely get exposed.
So mutual funds will be similar to the funds you have in your pension or 401K plan, but because they are managed by a professional, there are higher fees to buy into the fund. Personally, I stay away from mutual funds not only because of the fee, but also because I have heard stories from people in the industry about how those professionals are paid. Not all portfolio managers are paid by the performance of their funds, but more by which companies they push into their funds. So their own financial gain is not always necessarily tied to yours.
So I tend to shift towards index funds. Index funds take less management since the stocks are not as “custom picked” as mutual funds which means they have low management fees to invest. Probably the most famous index fund is the S&P 500 Index which averages an 8% return per year, and will likely over a long period of time give you the gains you would like and more.
4. Real Estate
So the first few things I talked about are relatively easy to start with a relatively small amount of money. With real estate, you’ll need a larger sum of money to get started due to a downpayment that is required to purchase the home. You will need to do research on similar properties in the value and understand the location to make sound decisions on value for your property investment.
5. Yourself
The only investment no one can take away from you. Read, educate yourself, find mentors and continuously improve to help mold yourself in the person you want to be. Keep coming back to the channel for more!
Sources:
fool.com/the-ascent/banks/articles/does-average-american-save-money
