There are a million “reasons” to put investing off: You’re expecting a raise. You aren’t sure if you know enough to get started. Retirement feels a hundred years away.
But there’s a single, even more pressing reason why you should start ASAP (like, right now): $100 a day. $4 an hour. $3,000 a month. That’s how much you could miss out on by waiting to invest. (You can thank compounding returns for that one. Here’s how we calculated it.)
That’s why investing makes a great New Year’s resolution. Although we tend to use the term “resolutions” loosely — we like to treat them more like New Year’s intentions. Because resolutions are rigid, and they make you feel like you’ve failed if you fall off track. Intentions are more flexible — they say yes to progress, no to putting unnecessary pressure on ourselves.
So if your intention this year is to dive in and get started, here’s a roundup of our best advice to help you do it.
Resolution: Check off debt and saving to be free to invest
If you have high-interest debt, it’s probably going to cost you more in interest to carry that balance than you’d be able to earn by investing. That means it’s usually best to pay it off first. Here’s a little more about the difference between good debt and bad debt. Here’s how to decide whether to pay it off now or invest instead. Here’s an explainer on student debt and a game plan for knocking that debt out. Here’s our advice on paying off credit cards.
It’s also a good idea to build up an emergency fund before you start investing. That way, you’ll have a cushion in case something happens (like you need a last-minute surgery or your car breaks down or your source of income disappears). Here’s why giving that emergency fund a descriptive name can help you get there faster, and here are some guidelines as to what does and doesn’t count as a financial emergency.
Resolution: Get in the know
We’ve got you. Here’s our Go-Getter’s Guide to Investing. It’s pretty quick, because we firmly believe there are only a few things you need to know to get started.
But if you want to dive deeper, we can help you do that, too. Here’s an explainer on how investments make money. Here’s the lowdown on the difference between investing and saving. Here’s what you need to know about two major investing concepts: compounding and diversification. Here’s why now’s a good time to invest and why you should keep investing consistently.
Maybe you’re also wondering how Ellevest works, exactly. Here’s the gist: You give us some info about yourself, like your age, job, salary, and gender. Then you tell us what your money goals are, how much you need for each of them, and when you want to hit them. We take all that in, and we give you an investment plan designed to get there. Then all you have to do is set up your deposits, and we’ll take it from there.
Want more deets? Here are the tough standards we use to pick the investment funds we include in your account (aka ETFs — here’s what those are). And here’s how we make the forecasts we show you as realistic as possible so you can plan your real life. We’re a fiduciary, so you can rest easy knowing your best interests always come first in our book.
Resolution: Step up your retirement game
Building your own version of a dream retirement doesn’t just happen. The earlier you get started, the better. That’s especially true since women live six to eight years longer than men but retire with two-thirds as much (true, sad story).
So here’s an explainer to help you figure out how much you actually need to retire. And here are some helpful deep dives you probably didn’t know you needed: why you should get as much of that employer 401(k) match as you can, and what that whole “vesting” thing means, the difference between an IRA and a 401(k), an explainer on 401(k) rollovers if you’ve changed jobs in the past, the difference between Roth and traditional 401(k)s and IRAs, and SEP IRAs for freelancers and the self-employed.
Resolution: Invest intentionally
We’re big fans of intentional investing. The way we see it, that means three things: being intentional about why you’re investing (your goals), what you’re investing in (your impact on the world) and who you’re investing with.
A little more about those goals
Buy a home. If you’re looking for a dream home, first you’ll need to know whether buying a home is the best financial move for you. (It’s not always.) Then you’ve got four more steps to take before buying, including investing toward a 20% down payment (here’s why that number is important). With Ellevest, you tell us about your dream house, and we’ll use live Zillow data to estimate how much that down payment might be.
Start a business. If you’re ready to become a boss lady, check out this guide to starting your own business and this guide to raising funds. Then make a plan with Ellevest to help you replace your income while you’re getting that business off the ground. (Because even entrepreneurs still gotta eat.)
Plan for kids. Planning on having children often means taking a career break. Here’s how much that can cost you and steps to take to be prepared. Then you’ll want to know about ways to save for college and start building a cushion for costs like summer camp, which is what our Kids are Awesome goal is for.
Grow that pile. Maybe you aren’t sure exactly what your goals are yet, but you definitely want to let your money grow. We’re here for just building wealth, too. (You know it.)
Boom. Here’s to your money’s most powerful year yet.