Starting the journey to financial freedom with these great investments
Investing is often a scary and stressful topic to discuss. This can be the case even with the most trusted people in your life such as close friends or family. Because investing and money can often be taboo topics to discuss, people are often left without any knowledge on how to invest, leaving them at a disadvantage.
I was one of those people. After graduating college almost two years ago I had zero dollars invested and absolutely no idea how to get started. So I turned to my closest non-human friend . . . the internet. The internet is an amazing thing if you learn how to utilize it well. There is so much knowledge at our fingertips, it’s truly unreal.
Now, armed with the power of the internet, I went to work in reading every, blog, post or article I could on investing to figure out how I could get started in the incredibly complicated world of investing. After all of that research, here is the baffling realization I came to:
Investing doesn’t have to be complicated. It can actually be as simple as you want it to be.
The complexity all depends on your approach. If you want to build wealth continuously over time, like Warren Buffet, then investing can be pretty simple. If you want to be an instant millionaire by gambling on GameStop and crypto then investing will become much more complicated and you’ll likely set yourself up for failure and potentially a lot of lost money.
If you’re opting for the former approach, then a great way to get started is by picking low risk investments to build the foundation of your portfolio. One awesome type of low risk investment is the ETF.
Exchange-Traded Funds (ETF) are a type of pooled investment. Often, ETF’s track a particular stock market index, industry, or other asset. ETF’s are great in that they can be bought and sold on a stock market exchange in the same way that a regular stock can.
1. SPDR S&P 500 ETF (SPY)
The SPRD S&P 500 is an exchange-traded fund that is designed to track the S&P 500 stock market index. The S&P 500 stock market index tracks the performance of 500 large companies listed on stock exchanges in the United States.
When you invest in the SPDR S&P 500 ETF you are investing in those 500 companies which gives you immediate diversification with your investment and greatly reduces your risk. This makes the SPDR S&P 500 ETF an attractive option for those new to investing. This fund is currently the largest ETF in the world meaning that a lot of people are taking advantage of investing in this exchange traded fund.
2. Vanguard Information Technology ETF (VGT)
The Vanguard Information Technology ETF (VGT) is similar to SPY in that it is composed of many holdings, 362 last time I checked. What’s different about VGT is that it is focused on the United States tech industry so it’s holdings are mostly comprised of tech companies such as Apple, Microsoft, and NVIDIA.
This allows you to more heavily invest your money in the tech industry as a whole rather than trying to bank on several individual companies.
3. Vanguard Total International Stock ETF (VXUS)
Just like SPY and VGT, the Vanguard Total International Stock ETF (VXUS) is comprised of many holdings, around 7,673. What makes VXUS different is that it is comprised of all stocks outside of the United States. This allows you to invest in many different international companies including Nestle, Samsung and Toyota.
Investing some of your money in an international ETF such as VXUS gives you further diversification and mitigated risk as you will no longer be subject to solely the United States stock market.
As you can see, there are many ETF’s out there that can serve a lot of different individual investors’ interests, yet they also serve as a low risk investment that is great for beginners to get accustomed to the world of investing.
For me, two years later, I have built much of my portfolio around ETF’s and have thousands of dollars invested after having little to no education on investing. I hope that this post helps those who are struggling to figure out how to get started investing.
Let me know what you think! Feel free to leave a comment and thank you for reading!
- Cam
