Your portfolio reflects your long-term wealth-building investment strategy – not the short term. Why? Because none of those are investments, they are all short-term assets. What you don’t see in this image is a checking account, savings account, or debt. Your retirement accounts, your investment accounts, even your home are types of investments. Everything you own is considered part of your portfolio. In the picture below, you can see a silhouette of you at the top of the tree. Whenever you read about Investing 101 you’re bound to hear the words Portfolio and Diversification. The Meaning of Portfolio and Diversification Personally, I don’t even have a savings account as it just complicates my life. You would be crazy not to invest, and you would be equally mad to jockey your money between a checking and savings account as the difference is negligible. Interestingly, over 30 years, you can only expect to gain roughly $175.80 with a checking account and $281.89 with a savings account – a difference that is pretty meaningless when you look at it over such a long period.Įspecially when you would gain over $6,000 if you had just invested your money like we suggested. With an investment account on average, you can expect to earn over 19,700% more as compared to a checking account. The illustration below shows a $1,000 investment over 30 years and compares it to what you would earn with a checking account and what you would earn with a savings account. The only way to combat the bank taking advantage of you is to invest it yourself. After the bank collects their profit, they give a tiny shaving of it to you.īut wait, that’s your money they are investing, you deserve a bigger cut! When you deposit your money in a bank, it turns around and invests that money at 7% a year or more. That mindset shines through in the interest rates of checking and savings accounts. I’m sorry, but the joke’s on them.Īs it turns out, banks don’t like to give away their money. One common approach of people who fear the market is that they put the majority of their money into a combination of checking and savings accounts. Some beginner investors are afraid of the market. Investments by definition are high yield over the long term. That said, putting your money into a business you create, or a home you will live in, can also be considered an investment. The investing we talk about revolves around the stock market. Investing, at its heart, is the trading of your money today for a lot more money in the future. What Is Investing and Why You Should Care We explain the basics of simple investing and aim to inspire the proper mindset you need to succeed.Įnough chit-chat – let’s get started. We also discuss investing for beginners on the podcast:Ĭonsider this your investing for beginners 101 cheat sheet.

Don’t worry we’ll guide you through the process in the following articles of our investing series. You’ll be relying on automation and letting the computer do it for you.Īfter you read this guide for new investors, the only thing left for you to do will be to take action. You also don’t have to do all the work, nor do you have to give away all of your gains to avoid doing the work.

You can understand investing, and if you read this whole guide, you’ll have the basics you need to get started – you don’t need a financial planning expert to do it for you. This is a beginners guide to help you get started. Even if you only invest 5% of your money, it would still be worth it. You know you need to invest your money if you want to up your personal finance game. The good news is, we’re about to tell you that all of your concerns are nonsense. The problem is, you never took an investing for beginners class, you’re scared to lose all of your money, and you don’t want to do the work. You understand that investing is smart and that a lot of people have made a lot of money doing it.

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