If you want to build wealth and work toward financial success, one of the best things you can do is invest. Investing is a way to put your money to work on your behalf, reaping gains that go beyond what you earn at a day job. With the current state of the economy, and expectations for the future, your best bet for future financial freedom is to invest now.
Unfortunately, many consumers wrongly think that they need a lot of money or need special connections to invest. It’s 2015, and the investment landscape is different from what it was 20 or 30 years ago. Today, the Internet provides widespread access to different investment opportunities.
No matter your level of investment expertise or income, there are opportunities for you to build success through investing. Here are some of the interesting investment choices for 2015:
One of the most interesting investment apps to consider in the new year is Robinhood. This trading app focuses mainly on helping investors trade ETFs. There are no account minimums, and there are no trading fees. Basically, with your cash account, you can trade as much as you want domestically without paying any fees.
How will Robinhood make money? The plan is to make money on margin traders, and traders that focus on foreign trades. If you trade on margin, you will be charged interest on your account, and there are fees associated with certain types of trades that are considered a little more complex or unusual.
For most investors, though, Robinhood makes it easy to trade from your phone, free of charge. Right now, there is a waiting list to participate, but you can sign up for access. It’s important to be aware that frequent trading is rarely a good idea, though. Just because you can trade without paying commissions doesn’t mean that you should trade frequently.
Acorns is another investment app aimed at beginning investors who don’t have a lot to start with. With Acorns, you pay either $1 per month (for accounts with less than $5,000) or you pay 0.25% a year (if your account has $5,000 or more). You can put as little as you want in the account, deciding to have a small amount automatically or manually transferred as needed.
You can even get suggestions on portfolio composition, based on your risk tolerance. Your portfolio can be automatically rebalanced, and there are no minimum monthly contributions or account minimums. This is a great option for those who like the idea of Betterment, but can’t quite commit to setting aside $100 every month.
With an account like Acorns, though, it’s important not to become complacent. It’s a great starter investment account for those who only have a few extra dollars a month. However, it won’t result in enough to retire on unless you make it a point to increase your contributions regularly. As you get a raise or pay down debt, you should invest more.
You’ve probably heard about crowdfunding efforts like Kickstarter and Indiegogo. While these are great places to contribute to projects you like, you aren’t going to see any real financial benefit since these aren’t investing websites.
One of the recent developments has been the introduction of investment crowdfunding. This takes the concept of crowdfunding businesses but allows investors to buy shares in a company. It’s a way for businesses to raise money through crowds, without turning to angel investors or trying to raise venture capital. It also provides investors who might have a decent amount of money, but not enough to put hundreds of thousands of dollars into a single real estate transaction or business, the chance to invest.
In order to take advantage of investment crowdfunding, though, you need to be an accredited investor. This means that you already need to have substantial assets, or have a reasonably high income. Investment crowdfunding is likely to grow in popularity during 2015 among members of the upper middle class.
The MyRA is a relatively new account introduced not too long ago. It’s a simple way to start investing in relatively safe assets for a tax benefit. There are income restrictions and other eligibility requirements, but it can be useful for certain savers who have been finding it difficult to set money aside in a tax-advantaged retirement account. The returns aren’t as good as investing in the stock market, but for those who can only set aside $5 a paycheck, it can be one way to start. However, as with other low-contribution accounts, you need to find ways to increase your contribution as soon as possible since lower thresholds will never be enough to truly build wealth.
Health Savings Account (HSA)
Yes, the HSA has been around for some time. However, many people don’t realize that it can also be another tax-advantaged investment account. Once your HSA grows to $2,000, many custodians will allow you to invest the excess in higher-returning assets. You could invest in index funds without too much trouble, boosting your HSA returns. Plus, you get a tax deduction for contributions, and the money grows tax-free for qualified health care expenses.
You do need to meet certain requirements to qualify for the HSA, and there are contribution limits. Check to make sure you are in line with the requirements and find out from the custodian what it takes to invest in index funds.
If you want to try something different with your investments for 2015, chances are that you have opportunities. Do a little research, and realize that anyone can start investing and building wealth for the future.