| By: Shawn Christopher
Investment Director for the Page Murphy Investment Group
People often wonder how to invest and what type of investment opportunities exist to better one’s future.
Here is a list of 5 investments to be considered, whether you are a student, a parent, or anybody for that matter.
These five don’t require large amounts of money and are investments you can make to build simply wealth and take care of your future.
A Brokerage Account:
To invest, you will need what it is called a “brokerage account.” You can go to your local bank to open an account, or you can open one with an investment company like E-Trade, Scottrade or TD Ameritrade to name a few.
Like any account, you can research and buy into investment securities anywhere around the world. Some brokerage accounts require minimum deposits to get started. E-Trade and Scottrade require minimums of a $500 deposit while TD Ameritrade may require up to $2000.
The money is yours to be used for investing, it is not a fee that you have to pay. Some accounts like Roth IRAs have different stipulations and don’t require minimum deposits.
A Low-Cost Index Fund that tracks the S&P 500:
A low cost index fund is just a name for a mutual fund that tracks the S&P 500. The S&P 500 is a collection of every major U.S. corporation that is publicly traded. It is one of the safer types of investments you can make, and the kicker is that you are betting on the U.S. economy as a whole, so you are well diversified.
If you use Wikipedia to look at the S&P 500 (or Standard & Poor’s 500), you can see a 25-year chart of the annual returns of the S&P 500, including dividends.
Since 1985, The S&P has averaged returns of about 12.98%. In 2014, the S&P 500 returned 13.69% and in 2013 it returned an incredible 32.69% – a lot higher than any savings account, bonds or bank product you can find.
It may, however, fall in price during recessionary times so be sure to speak with an investment professional to get more information about it.
Common stocks are another great way to build wealth. However, it is wise that you consult with a professional financial advisor so you can develop a sense of what you are getting into and how to pick stocks. This is not a recommendation by the way.
Investing a little bit of your savings into high performing blue chip companies like Apple, Bank of America, Microsoft, Wells Fargo, Walmart and Berkshire Hathaway (Class B shares), can be a great way for you to build wealth over the long term.
These are companies who have historically generated high returns and capital for their shareholders. You do not need to get many shares, simply buying 1 or 2 each month or every few months can go a long way.
Massive Open Online Courses (MOOCs):
There is perhaps no greater investment than investing in yourself to increase your value. MOOCs are a great way to earn extra certificates that you can add on to your resume in addition to learning new skills native to your field of study.
Many of these courses are free and only require you to register. Ivy League universities such as MIT, Harvard University, Berkeley, are among some of the colleges offering free courses. There are schools literally from all over the world. Most of the courses are online and have an instructor/professor teaching them, but some are also self-paced as well.
Virtually every field of study is available. For a few hundred dollars, you can take the courses for a professional certificate (prices range from $50 to $500).
This is crucial and can even save your life many years down the line. It is good to put your personal well-being first. Consider things such as wage insurance to help cover your bills during unemployment or an unpaid sick leave. There’s disability insurance, life insurance, health insurance and different insurers can put together a policy that can accommodate your circumstances.
Insurance is vital to have whether you are young or old.
Extra Tip – Gym Membership:
This may seem to be the most peculiar item on this list, but it is critical. Obesity is a leading cause of many health issues including, diabetes, cancer, heart disease and other preventable diseases.
It’s estimated that more than two-thirds of Americans are overweight or obese. If people simply took better care of themselves, these risks could be drastically reduced. Basic things like jogging, eating better, drinking water and sleeping earlier will improve your health.
You can avoid many future health risks and expenses in doing so. Know your body inside and out and try to establish a good relationship with your doctor. Many people will take the time to learn workouts and techniques very well, but you should also go the extra mile to learn how your body works.
It’s not always about working out; sometimes it’s about what you are putting in your body.
Be sure to perform your due diligence with each of these items listed. For example, some banks require a minimum deposit to open a brokerage account that may range from zero to $1000. Some investment securities are riskier than others and may require you to sit down with a financial advisor.
These tips are designed to help you reach your goals and are great starting points for any beginner to consider.
New Year’s and tax seasons are just around the corner, and if you arm yourself with knowledge you can play smarter in addition to working harder.