At the second in a series of eight webinars hosted by Student Financial Support, financial educator Shahar Ziv explained how to get started with investing. Some top insights from the session include:
- Be average. You didn’t get into Hopkins by being average, so this advice sounds weird. But when it comes to money, aiming for average gets you above-average results. It’s a paradox. Successful investing is generally not about Doing the Most; the people who aim for average and choose low-risk investments tend to do better than the people who try to be exceptional by chasing higher-risk options.
- Time is your most valuable asset. Start saving early and save consistently once you get started. Compound interest is a superpower. Even small amounts can grow to large sums if they are given enough time to incubate. It’s less about timing the market (see insight No. 1) and more about time in the market.
- There are a few things you should shore up financially before you start investing. Build up a three to six-month emergency fund, pay off high-interest debt (credit cards), max out your retirement plan (especially if your employer matches), and save for other short-term needs (like a down payment for a home). Once those are in place, investing can become a priority.
- Low-cost index funds beat high-cost index funds. It costs less to get started, and the more expensive options don’t necessarily perform any better in the long term.
- If you are going to work with an investment advisor, make sure they are a fiduciary. A fiduciary is a person who has a legal oblication to put your interests above anything else. It doesn’t remove conflicts of interests, but it minimizes the likelihood of getting conflicted advice.
The full video is available below. Don’t forget to register for the next installment in the series, 401(k) or Nah: Making Sense of Retirement at 5:00pm on Monday November 18.