I have been putting part of my paycheck into a high yield savings account, but haven’t bothered with investing it in a responsible manner partially due a fear of losing the money due to bad investments. I’m finally realizing how much potential money I’ve lost by letting my money stagnate. Please advise me on how to responsibly invest my money, thanks!
It depends how old you are, how liquid you need the funds, how risk adverse you are and what country you’re in.
Vanguard. You can either invest directly with them, or open whatever brokerage service if you want to gamble on stocks in addition to being responsible.
Invest around 30k in each of VEA VSS VYM, enable DRIP and then you can have 10k to yolo on GME or whatever if you want.
Some others have said, but it really matters how old you are and what your goals are. But as a general rule of thumb…
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money for bills and monthly expenses can stay in a low-interest checking (or savings) account. Keep only as much as you need for a month, maybe a bit as a cushion just in case
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money you’re planning on spending in the next 1-5 years in a high yield savings account (you’ll make higher interest) to use as “sinking funds” or an emergency fund (3-9 months worth of monthly expenses, give or take)
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invest the rest
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First you need to educate yourself on different investment strategies, but a broad MSCI World can easily give you the peace of mind and diversification.
Check https://www.justetf.com/en/academy/etf-for-beginners.html which is providing very good starting point. There are more articles there that will describe the basics.
The best advice is not to invest in single stocks and always keep your investment portfolio diversified.
It’s gambling with extra steps
If you open an account with vanguard you can choose to have your money automatically put in a money market account earning 5% like this one https://investor.vanguard.com/investment-products/mutual-funds/profile/vmfxx
Or Schwab has SNSXX https://www.schwabassetmanagement.com/products/snsxx but you need to buy it manually
In addition to all of the very good advice in this thread, I will add I am a big fan of Dollar Cost Averaging. If you have a large amount to put into the market, don’t put it in to whatever fund you decide all at once, put it in on a monthly basis. This protects you, to some extent, from the market taking a dump the day after you buy, because you are always buying. And your cost at the end is an average of all the times you bought in, and is not so much tied to prices on the day you bought in.
This may involve some planning for moving money around, because you will want to keep the remainder in a good HYSA in the meantime.
If you move the money into a place like vanguard, it will sit in a money market account earning 5.25% (as of now) while you DCA into other funds.
Get a fiduciary advisor. Not just a stock trader. Fiduciaries are supposed to look after your best interests, not their own profits.
Diversify.
Invest in appropriate risk based on your age. Youngsters can invest in risky stocks because they have decades to make up any losses. As you age you shift some risk to moderate risk or more stable investments. As you near retirement, your risk should be minimal.
Get an advisor, a fiduciary
Money market funds or CDs should get above 5% right now whether thats with a bank or brokerage.
It depends on your time horizon and risk tolerance. Typically dont buy stocks based on hunches… just buy index funds and/or interest bearing vehicles. I have a small basket of stocks, a lot more index funds, and then the majority of my holdings are in a money market fund in this high interest environment. I would consider rebalancing to more index fund allocation if interest rates diminish.
Thank you, I’ll look into money market and CDs
Its important to be taking advantage of tax deferred savings btw. I just assumed these funds are all taxable savings and that you are already contributing to your retirement and health savings.
Simply investing your savings without putting money into iras/401ks/hsas would be a huge mistake in the long term.
The generic advice is diversify and invest in the riskiest options you can stomach when you are young. For me, that means low cap index funds.
Where do I get started if I want to do that? Is that through vanguard?
Yea vanguard is good I hear. I have a bank account with bank of america, so I use merrill. Chase has their own investment firm. Most large banks have bought one. Take your comfort where you find it with banks. I’m honestly not a fan.
There are also independent ones. I also have an account with tiaa, but that’s only for educators. You might find something tied to your industry as well.