Learning where to invest money to get good returns is not always easy. To paraphrase a well-known saying about procrastination, “The best time to start is yesterday, the second-best time is now!”
The same is true with investing. Your biggest ally is compound interest, and its biggest multiplier is time. The sooner you begin investing, the more time your money will have to work for you.
Even if you only have $10/month to invest (I bet you can scrounge more), you should start putting it to work immediately.
Also, the earlier you begin investing, the faster you will learn the ropes. We learn best through action (and teaching), so I highly suggest you pull the trigger in order to start learning more today!
The more you learn and the more your money compounds, the harder your money will work for you. This compound effect of knowledge, interest, time, and capital will provide exponential returns for you—literally!
Why would you be okay with missing out on these powerful tools?
Don’t delay. Start investing SOMEwhere.
I know, “Investing is risky.” However, if you’re fine with buying a $100 pair of shoes but not okay “risking” $100 in an investment, you need to re-prioritize your life!
Don’t make excuses, and don’t let fear hold you back. The faster you get started, the better!
Choose a Simple, Understandable Investment
You need to decide on an investment strategy that suits your level of risk tolerance and automation preferences.
For the record, this chart does not depict my favorite investments, and I don’t invest in a lot of these. These are simply examples of some low-risk investments, as well as some higher-risk investment strategies!
Don’t get wrapped around the wheel on what strategies I put in what place. Just use this as a tool to visualize and determine which strategies you wish to utilize for investing.
As you can see, investments run the gamut from high risk/reward to low risk/reward and everywhere in between. You need to decide how risk-averse you want to be with your investment portfolio.
My advice is that you should be willing to take a decent amount of risk at an early age, especially if you have a solid career like the military, which will provide for all of your survival necessities even if your investments fail.
The safety net of a solid career means you can take on more risky investments, knowing that your “worst-case scenario” will still include provisions for housing, food, and necessities.
Now, I’m not saying you should throw caution to the wind, but you can afford to have a riskier allocation in your Thrift Savings Plan or buy a rental with a lower initial down payment.
Whatever your risk tolerance, you need to choose strategies that match it and stick to them.
Don’t turn this into a difficult situation. Just match up an investment with your tolerance for risk and begin investing!
Pay Yourself First
The first place you need to allocate funds from your paycheck is your investments.
If you utilize your budget and spend money all week, planning to invest whatever is leftover…you won’t invest much (or anything).
Rather, you should allocate funds for your investments BEFORE you spend any money from your budget. That way you are GUARANTEED to have invested that money.
Psychologically, it is much harder to justify buying a pair of Jordans when it means you won’t have money for groceries than it is when you “could invest a little less this month.”
Don’t fall into this trap.
Pay yourself first and always fund your investments before anything else, in order to ensure you don’t cheat your future self out of a great retirement!
Delayed Gratification
In the 1960s, a Stanford professor named Walter Mischel began conducting an experiment where hundreds of children were brought into a room individually. “The researcher told the child that he was going to leave the room and that if the child did not eat the marshmallow while he was away, then they would be rewarded with a second marshmallow. However, if the child decided to eat the first one before the researcher came back, then they would not get a second marshmallow.
So the choice was simple: one treat right now or two treats later.
The researcher left the room for 15 minutes.” (Source).
Over the following decades, he stayed in touch with these children found a remarkable correlation between delayed gratification and success. The children who were able to wait for 15 minutes in order to receive the second marshmallow were MUCH more successful (on average) in life!
Cut Expenses to Invest 
Delayed gratification is the ability to resist a small reward now in order to get MORE of a reward down the road.
For example, I sold my nice sports car (S2000) last year, knowing that down the road I will be able to buy a nicer sports car.
In the world of finance, delayed gratification appears as opportunity cost. Opportunity cost is the view that every dollar you spend today is a dollar, plus interest, that you will NOT have in 5, 10, 15+ years.
For this reason, you owe it to yourself to cut expenses in order to invest more every month. Avoid the new iPhone, J’s, and car so that you can retire years (literally) earlier!
Your income may not be the greatest, but expenses are usually what holds us back from achieving our dreams. Manage your expenses first, and invest every penny you can!
Check out Prosper which allows you to start lending out just $25 to others based on a variety of criteria
Keep Investing No Matter What
Do not stop investing.
If you think the market is going to crash, perhaps you adjust your strategy, but KEEP INVESTING! Don’t let the fear of “what if” stop you from investing. Set up automatic deposits if you need to, but never stop investing in your future. If the market tanks…it will rise again. Just stay the course.
Change Allocation with Age
As we mentioned earlier, risk tolerance plays a role in your investment portfolio. As you get older, and thus closer to retirement, you will want to adjust your portfolio to safer investments.
That could look like moving your money from 90% stocks and 10% bonds to 90% bonds and 10% stocks over the years…or it could look like moving your money from investing in Bitcoin to a high-interest savings account.
Whatever you choose to invest in, be sure to protect yourself against the downside as you get closer to retirement!
More Risky to Less Risky
As you get older, your risk tolerance should get less and less in order to protect yourself against a recession hitting right before you were planning to retire.
This may not be necessary if you have prepared well enough that you don’t need the retirement account. However, for the vast majority of the population, shifting your allocation(s) more and more toward low-risk/low-reward (safe) investments will be the best strategy as you reach retirement age.
Track Your Investments and Net Worth with This App
There is a common adage in sales and management huddles: “What gets measured gets managed”.
That is why you need to be tracking your net worth regularly! If you pay attention to it and track it monthly, it will help you focus on investing and growing your net worth.
Just as weighing yourself regularly will help you reach your desired weight, tracking your net worth monthly will help you attain your financial goals!
I don’t think you need to track every investment monthly, but periodically for sure. I don’t check the value of my 401k more than four times a year because I don’t plan on adjusting my allocation anytime soon. At the same time, I track and review the reports for my real estate investments every single month.
My rule of thumb is that the more risky and involved an investment is, the more frequently you should be tracking it.
Personal Capital
I use Personal Capital to track both my net worth AND investments!
Personal Capital is incredibly simple to set up, and it displays the value of every account I operate in one dashboard. This can be accessed from both a desktop and a simple application on your cell phone.
This application allows me to track interest accrued, expenses, debt payoff, and my net worth anytime I want!
I have used Personal Capital for about four years now, and I can’t think of an easier way to keep a thumb on the pulse of my investments than through this account!
It doesn’t cost anything to set up an account with Personal Capital, and I highly recommend that you give it a shot!
Where To Invest Money To Get Good Returns
There are a lot of options…tell me what you’re going to do first in the comments down below!
2 Responses
The marshmallow experiment. The classic example.