Category Archives: Investing

How to Invest With No Experience

Maybe you’re fresh out of college in your first job, or maybe you’re getting a late start on your financial health. Either way, you’ve decided that you want to start investing. You’ve got some money saved up from your Bar Mitzvah, or maybe you’re keeping to your budget and throwing $500 a month into your savings account. And now you want to start investing but don’t know where to start. You’re in the right place, we’ll guide you through your best options.

Are You Investing For Retirement?

First, you have to decide what you’re investing for. If it’s for retirement, consider your 401(k) and IRA options. If you’re young and are in a low tax bracket, the Roth IRA is a great option. Whether you’re looking for a retirement account, or a taxable investing account for the short-term or medium-term, consider a low-cost company like Vanguard or Fidelity. Getting set up with them is very easy. Simply create an account on their website, and they’ll guide you through the process to get you set up. If you’re not sure which kind of account you need, there’s a clear hierarchy of investment accounts that you should follow.

It may feel overwhelming at the beginning. You have so many investing options and may not know where to start. You can invest in stocks, bonds, ETFs, and the list goes on. Thankfully, we’re here to help. If you’re young, you likely want to invest heavily in stocks, which tend to perform best over long period of time. If you’re in your 20s and 30s and you are going to have this money for 40+ years, stocks make a lot of sense.

Don’t Invest It All In One Stock!

Now that we know to invest in stocks, that still leaves almost an unlimited number of options. Should you put all your money into one stock? Apple has performed well, right? So should we just buy that and let it ride? Absolutely not! Diversification is really important. One stock might be volatile, but if you own bits of a lot of stocks across industries, you’ll be better protected from large swings.

Let Mutual Funds Do The Work For You

To diversify properly, we want to buy different stocks that cover different industries. And the best way to do that is to invest in a mutual fund. A mutual fund is a collection of stocks, so instead of you buying a little bit of each stock (which can add fees for each trade), you can effectively own parts of many stocks, without having to pay a $5-$10 fee for each trade.

You don’t need to be an expert to begin investing. Unless you want to do a lot of research, why not let someone else do the work for you? This is what makes mutual funds so attractive. Mutual funds are often run by groups of experts, so they do all the work, and you get to take advantage for a relatively low rate of 0.5%-1.5% of fees, or $5-$15 of each $1,000 invested.

Index Funds Are Incredibly Cheap

To take it a step further, an index funds are a type of mutual fund that tracks a specific index, like the S&P 500, for example. The reason I am such a fan of index funds is that since nobody is doing any manual stock picking (the stocks in an index are fixed, so a computer can do the work for us), the fees can be really low. For example, Vanguard has an S&P 500 index fund with fees of just 0.05% of your investment. Practically, this means that for every $1,000 you have invested, you pay just 50 cents!

The thought of starting to invest can be daunting, but getting started doesn’t have to be hard!

Would You Sell A Percentage Of Your Future Income?

I was recently turned on to a site,, that allows people to “raise money in exchange for a small share of their income over 5 or 10 years.”

I love this idea for some people and the idea is really interesting, though I think there may be some downsides to consider as an investor.

Who Upstart Can Help

While many of the upstarts (people looking for others to invest in them) have a business idea they want funding for, there are some upstarts with very different reasons and needs for an upfront payment in exchange for giving up a percentage of their future income (and total payments are capped at a certain amount).

Some would like to pay off student loan debt or pay for their education, while others are looking to train for the Olympics or other athletic endeavors.

How Upstart Works

Each applicant (or upstart, as they are called on the site) creates a profile, and Upstart verifies his or her identity, credentials, and credit status. Then, Upstart assigns each applicant a fybdubg rate, the amount an applicant can raise for each 1% of income share, either for a 5 year or 10 year term.

Upstarts get to choose how much money they want to raise, up to 7% of their future income, with a minimum of $10,000 raised from backers.

Upstart attempts to target an 8% annual return to backers, though clearly there can be a large variance as some are more successful than others.

The Rules For Backers

Backers can invest in increments of $100, and upstarts have the right to choose whether to accept any particular backer. Upstarts provide updates to their backers about their progress, and backers can be involved in the success of the upstarts by giving advice and making introductions. Everyone is involved in the success of the upstart, and everyone is on the same team trying to make money!

Backers must be American accredited investors, which means a minimum of $1 million net worth (excluding primary residence) or a minimum of $200,000 annual income in each of the past two years ($300,000 if married). This clearly limits backers to a small subset of people.

The Future of Upstart

I love the idea of certain individuals getting funding now in return for a small percentage of their income later. If they don’t make much in the future, it doesn’t cost them a lot, and if they are very successful, they share some of that success with those who helped them. And for some of those entrepreneurs who want to start a business, they can get extremely valuable advice and connections, which may be worth even more than the original investment amount.

For backers, I don’t see the same benefits. An 8% target isn’t that impressive (I’ve done better with Lending Club the last few years), and on top of that there will be work to do if you want to get involved in the business the upstarts are doing. This may be best used as a fun way to try to make the world better and help young people who want to grow their business ventures, but as purely an investment platform, I’m not sure it’s the best idea.

I’m sure there will be many success stories, but I’m equally as concerned about those who try to scam the system, similar to what occasionally happens with Lending Club.

What do you think of Upstart? Would you use it as either an upstart or a backer?

Start Investing, No Pity Party, No Excuses

Start Investing, No ExcusesAuthor Bio: This post is brought to you by Joshua Rodriguez, a staff writer over at Check out his Prosper Loans review to learn more about investing in the hottest peer to peer lending network.

OK, before we get into this post, I want to let you know that I may piss some of you off. Although, that’s not my intention, I don’t mind. Sometimes tough love is the best love and that’s what I plan to give to you today. So, let’s get started with a simple question. Are you investing? If you are, cool, you’re on the right track. If not, it’s time to whip yourself into financial shape! It’s time to stop throwing pity parties, stop making excuses, and start doing what it takes to get your investments started. Why, because if you don’t, you may not be able to live comfortably when you retire.

My Response To The Most Common Excuses I’ve Heard

Excuse #1: It’s Just Not In My Budget Right Now – I’ve heard this from tons of people, including family, friends and clients. First off, just stop it! I don’t want to hear, “it’s not in my budget”. You know why? Because everyone I’ve heard this from has things in their budget they don’t need! Can you afford to go to McDonalds once per week? Can you afford to pay for those extra cable channels? What about that extra $10 a month you spend for higher speed internet when you honestly don’t see a difference?

The bottom line is, you do have money to invest. You may not have tons of money right now, but that’s OK, you don’t need tons of money. When it comes to investing, especially start up investing, every little bit counts. So stop telling me that investing isn’t in your budget! Start scraping together pennies and making it happen!

Excuse #2: I Don’t Know Where To Invest – Although this one’s not as common as the “it’s not in my budget excuse,” this is the one that pisses me off the most! So, you’re telling me that you know you have the money to invest. You’re telling me that you know investing is important. But, you top it all off with the crappy excuse that you don’t know where to invest. Come on everyone, is that really what’s stopping you?

So, why does this one get me so upset? We live in the age of the internet. All the information we need is at our fingertips. That being said, I can’t for the life of me understand why you’re letting lack of information keep you from securing a decent retirement. If you honestly don’t know where to invest, fine. I can understand that. Now, instead of telling me you don’t know where to put your money, go to Google, type in “What different types of investments are good for retirement?” and do some research. Get your reading on, and you’ll be surprised at how easy it is to find a good option for you!

Excuse #3: I’ll Start Investing Once I Get My Student Loan Paid Off – First off, don’t lie to me! If you’re telling me you’re waiting until your student loans are paid off, you’re procrastinating and you’ll find another reason to procrastinate when they are paid. Now that we got that out of the way…

One very important thing to remember here is that interest rates on student loans are usually pretty minimal. Paying your balance early will save you a bit of money, but will it save you as much as you would earn through investments? Chances are, the answer is no! Don’t let low interest debts stop you from investing, it just doesn’t make sense!

I Hope You Haven’t Learned To Hate Me From This Post

I know I’ve been a bit harsh here. Am I sorry about it? NO! I’m being harsh because reality is harsh. The bottom line is, if you haven’t started investing yet, you’ve already lost money. If you don’t start investing today, you’ll be losing more money. I want you to realize that. You should know that if you take 5 years away from a 40 year retirement investment that you add $150 a month to, you’re costing yourself more than $100,000 in final retirement dollars. Don’t just leave money on the table, reach out there and grab it!

Reader Question?

What is the most ridiculous excuse you’ve been given to the question, “Why haven’t you started investing yet?”