It’s probably important to mention this is simply my opinion based on my own research and experience, but I’m going to share it with you in terms you can easily understand (and won’t leave my site feeling even more confused than when you arrive.)
Load Error
What Should a First-Time Investor Invest in?
Technically, you can invest in anything you want, but it’s a good rule of thumb to invest your money only in things you understand – so beginning with simple investment products is a good starting point.
As a new investor, keeping things simple will allow you to get your feet wet, explore your personal risk tolerance (how comfortable you are with the possibility of losing money), and determine your goals for investing.
The Best Investment for New Investors
There are so many different types of investment vehicles available in this day and age.
And with it feeling like new types are in the media every month *crypto has entered the chat* the world of investing can seem like a very scary place.
That’s why it’s so important to narrow down your choices to things that feel somewhat “less scary”, do your research, and just get started investing.
The longer you wait, the scarier it can feel.
It should go without saying that just because something is “the best” for one person, doesn’t necessarily make it so for the next, but I’m going to go out on a limb here and say that I believe index funds are the very best investment for new investors.
It would probably help if we define index funds before I tell you how amazing they are, right?
Cool. If you’re not familiar with index funds, in layman’s terms, they are simply a type of mutual fund you can invest your money in.
You can invest in index funds in a regular taxable brokerage account or through your tax-sheltered retirement accounts such as your Roth IRA, Traditional IRA, employer-sponsored retirement accounts (depending on what they offer), and the like.
What sets index funds apart is when you purchase an index fund, you are actually investing in a small piece of every single company that exists in that specific index.
Yes, that’s a very generic explanation – there’s so much more that goes into index funds, but remember, we are keeping this list easy to understand and not filled with a ton of “bro” talk that makes our head spin.
I’ve learned everything I share in this article by doing my own research over the past few years in an effort to build a solid investing foundation.
If you’re a new investor or want to begin investing, I recommend you do the same.
Here are five reasons I love investing in index funds for retirement:
1. You Can Have it All
Remember, index funds include a portion of every stock in a particular index, which naturally makes them diversified.
Had I begun investing at 18 years old, I would have been much more aggressive with my investments and likely would have listened to everyone who told me that individual stocks are the best investment for new investors.
But today, as a woman of…ahem…middle age, I prefer to take a slightly more conservative route.
Again, abiding by my rule of “not investing in things you don’t understand,” I really don’t have the time or the interest to go out and research specific companies to get an in-depth understanding of the stock market itself.
I’m not exactly comfortable with my future financial security hinging on my personal knowledge of individual companies and stocks, yet I absolutely want my money invested in the stock market.
If you find yourself in a similar situation, you could take your money and spend “$ x” amount on Apple stock, “$ x” amount on Amazon stock, and “$ x” amount on Tesla stock and risk your financial future on the volatility of these individual companies.
However, if instead you purchased an S&P 500 Index Fund, you would still be investing in those same three companies plus all the other companies in the S&P 500.
And because you’re investing in every single one of those companies it offers you a different level of protection vs. investing in individual stocks.
When you own a small piece of all of the stocks in the S&P 500, yes, sometimes some of the stocks will do poorly, but that will often be balanced out by the companies that are doing well.
Essentially, index funds offer the ability to have it all while still being diversified and maintaining a reasonable comfort level that you won’t lose it all overnight!
2. Index Funds Have Low Management Fees
When investing in mutual funds, the funds carry fees to offset the cost of managing the funds.
Typically, index funds have much lower fees than other mutual funds.
You’ll sometimes hear these fees referred to as “expense ratios,” but since this is an article for regular people, we will just refer to them as fees.
7 Practical Tax Tips To Give You A Stress-Free Tax Season
Tax Time is Stressful
Essentially, tax season begins at the start of a new year. As Americans barely finish popping the champagne and ringing in the New Year, many feel pressure to carve out a substantial amount of time and pour over the prior year’s financial information, sorting, calculating, and preparing to file your income tax return.
Maybe you manage your stress well, but if you don’t, tax time has this tendency to suck the hope and joy out of Q1 and replace it with dread. Mostly because the task feels so daunting and the last thing you want to spend your time on is preparing your taxes.
An Accounting Nightmare
If you’re a small business owner, you may face an accounting nightmare if you haven’t kept good records throughout the year. The good news is that this can be the last year you feel this way.
Following these simple, practical tax tips will help you set up some basic systems you can easily maintain throughout the year, allowing you to quickly gather all necessary info come tax time.
Sticking to this system year-round will allow you to prep your documents and have everything ready to prepare for your return in under an hour.
Practical Tax Tips
These tips are “practical,” not expert, meaning these tax tips are more relevant to practice, not theory. They just make sense for the average person to put into practice and aren’t required steps for filing your tax return.
They do not require accounting experience or a finance degree–just some diligence and consistency.
Create Systems To Keep You Organized
Many people have ditched the paperwork and opted for electronic billing and statements. This has been a great move for the forests; however, email can be a pain point for many. If the notification numbers and little red circles drive you crazy, there is a very simple way toorganize your email account in preparation for tax season.
This might sound fancy, but it’s nothing more than setting up a few additional email folders. Focus on creating folders for the following categories, if applicable:
Manage the Clutter
Take a few minutes to create all your new folders. throughout the day, when you receive an email or receipt for an expense, take a second and drag it into the appropriate folder for safekeeping. This only takes a second, so it’s easy to keep up with even if you receive a high volume of emails.
When you close out your month or whenever you sit down to update your spreadsheets (we will talk about these in the next tip), you will have all the transactions you need in one place.
Save the Ink
It’s up to you whether or not you find it necessary to print each email and receipt. You can opt to keep hard copies or use a cloud-based system to store your important documents, like Google Drive or Apple’s iCloud. This way you can save your ink and also access your information from multiple devices.
Still, while printing everything out feels a bit antiquated today, having a paper backup makes some people feel more in control of their finances, so you’re one of those people then, by all means, print your heart out.
Create a Yearly Tax Spreadsheet
This spreadsheet will be the cornerstone of your tax system. If you’re not a fan of using spreadsheets, you can skip this step and set up a financial management system like Quickbooks or Wave to track your day-to-day expenses.
Choose your program: What’s your preference? Microsoft Excel? Google’s Sheets? Apple’s Numbers? It makes no difference. Wherever your comfort level lies will be just fine. Set up your spreadsheet: Title it for the current year – you’ll likely want a new spreadsheet for each year – and create the following tabs (across the bottom): expenses, business expenses, income, and mileage.
(If you don’t own a business, you’ll simply omit the business expenses in this system.)
Maintaining Your Spreadsheet
You will need to decide what will work best for your schedule. You may want to add a block of time into your calendar at the beginning of each month to close out the prior month.
Use that time block to enter all your expenses, income, and mileage (if applicable) for the prior month into your spreadsheet. It may be easier to add each transaction as it occurs, especially if you are not a business owner, or choose to batch this task each week or month. Batching will likely save you time by doing it all at once instead of hopping into your spreadsheet multiple time each week.
Whatever schedule you decide on, consistency is key. A little time each week or month keeps you from having to spend a lot of time at the end of each year.
Track Your Expenses
This is applicable to those with their own business. However, if you have personal expenses you plan to deduct upon filing (like charitable expenses, energy efficiency upgrades, etc.), then this step applies to you too.
Be sure to track your expenses, but don’t overcomplicate this. Simply determine the easiest way for you to consistently keep track of your expenses. Include the date, amount, where the money was spent, and what you spent it on.
Stash Your Receipts
It’s also good practice to make a note on paper receipts so you can identify them easily and save all paper receipts (and the emails in their appropriate folder) in a small accordion file. When closing out the month, enter all receipts in the spreadsheet, and you’re finished until the next month.
Of course, if this system doesn’t sound simple to you, simply adjust as needed. If a process does not feel effortless and easy to maintain, it’s unlikely you’ll stick with it.
Track Your Mileage
Most people know they should be tracking and deducting business miles driven, yet surprisingly many people don’t bother doing so…probably because it’s a pain! I want to give you a few ideas to make this task more automatic.
Tracking your mileage can feel tedious, and many will either estimate or skip claiming the deduction altogether…that’s money you’re literally leaving in the government’s pocket!
Furthermore, most people who estimate their mileage are way underestimating. Tracking your mileage does not have to be difficult or take a long time.
Mileage Tracking Tips
Try some of these tips:
Log Your Totals
Periodically throughout the year, enter this information on a spreadsheet for safekeeping (and easy access at year-end). Some apps will even allow you to run reports you can print.
Most small business owners are aware that they can write off miles driven for their business purposes but don’t forget also:
Track Your Income
This likely won’t apply to you if you are a straight W-2 employee, meaning each January, your employer mails you a W-2 that you use to file your taxes. But if you are self-employed in any way, it’s a good idea to track your income.
Contractors, freelancers, and other business owners may have some months where they “earn” money, but it’s not actually paid until months in advance. Sometimes you may be paid via PayPal, check, bank transfer, etc., so it’s a good habit to track your income. In addition, if you’re earning income that is not already reported, it’s your responsibility to do so, and having a record of everything you’re bringing in makes that much easier.
Know What To Claim
A simple spreadsheet with a few columns, including date, company, and amount, does the trick. Add an extra column to mark the date you received the payment. This helps to know what income to claim and makes it easy to see if you’re missing any payments so you can follow up.
This can be updated each time you receive a payment, or you can simply add it to your month-end tasks.
Set Up Separate Accounts
If you are self-employed, it’s important to separate your business and personal finances. You can set up separatebank accounts at your local bank, and be sure to look for an account free of maintenance fees and balance requirements.
Not only does this ensure your business and personal finances aren’t co-mingling, but your account statements will reflect business transactions only, making it easy to check over to ensure nothing was overlooked.
Depending on the nature of your business, it might be a good idea to also set up a separate business PayPal account for the same reasons. This simple task will save you a substantial amount of time in the end.
Adjust Your Tax Withholding
This can be a touchy topic to many, but ultimately, you have to decide the best course of action for you. When you complete a W-4, you instruct your employer on how much tax to withhold from your paycheck. When you file your taxes at the end of the year, the IRS will look at the taxes you’ve already paid, apply your deductions, and determine if you’ve overpaid or underpaid your taxes. If you’ve overpaid, they will issue you a refund; if you’ve underpaid, you must pay the IRS instead.
Basically, if you’re owed a refund, that means you’ve given the IRS more money over the course of the year than you needed to and essentially have given them a zero percent loan all year long…aren’t you sweet?! Unfortunately, the IRS is not as generous.
A Tax Refund is Not a Bonus
While the thought of possibly paying the government can be scary, it makes more sense to have that extra money in your pay all year. A tax refund is not a bonus.
Many people keep their withholdings high to avoid the possibility of having to make a payment at tax time, but in many cases, this practice almost guarantees you’ll receive a refund each year.
Speak with your accountant or HR representative to get advice about adjusting your withholdings in an effort to break even at tax time. This will allow you to receive that additional amount in your paycheck so you can put it to work for you year-round. You can invest it in our high-yield savings account or index funds and earn interest instead of the IRS having your money all year and not paying you interest.
Share on PinterestShare on TwitterShare on Facebook
18/18 SLIDES
Index funds are passively managed, whereas mutual funds are actively managed.
I like to think of mutual funds as being “high maintenance” funds and index funds as “low maintenance” funds.
Mutual funds incur higher costs for marketing and management, which are passed on to their investors.
And while fees will vary amongst different funds, index funds typically require little management (they’re “low maintenance,” remember?), so the costs passed on to the investors will be substantially lower.
When looking at mutual fund fees they will appear to be a small percentage.
However, when we look at how compound interest works, paying seemingly low fees can equate to tens of thousands of dollars in potential compound interest you may be missing out on, which can have a massive impact on your investment account over the span of a few decades.
3. Index Funds Are Simple
In my opinion, index funds stand out in a space often deemed “complicated” because they’re simply…well, simple!
Maybe for you investing doesn’t feel complicated, but for many others, it can be incredibly overwhelming.
Because there are so many different investment options and opportunities, each one being nuanced, investing can scare away many potential investors who are otherwise willing and able to begin investing.
Not only does their simplicity make them the best investment for new investors, but if you’re anything like me and suffer from a serious case of F.O.M.O, you’ll love them even more!
Hearing about the current hottest stock no longer tempts me to grab my phone and immediately deposit all my savings into my Robinhood account.
The likelihood is that I already own a piece of this company in my index funds (completely dependent upon which index funds you invest in, of course).
Conversely, if you’re getting awful news every time you turn on the TV about a stock you’re heavily invested in, it’s going to scare you and make you worry about the state of your investment account.
Owning a piece of that company through your index fund, you will feel more confident it will be balanced out by the rest of the index and not lose sleep over it.
4. Index Funds Tend to Outperform Regular Mutual Funds
Believe it or not, index funds tend to outperform actively managed mutual funds.
Although the market can (and has) experienced significant drops over time, historically, the market has consistently trended upward.
Of course, as an investor (of any type), you’ll experience some downturns, as nothing is a sure thing 100% of the time.
But if we look specifically at the S&P 500 from our earlier example, it has posted an average annual return of almost 10% since 1928; therefore, if you owned an S&P 500 index fund you would have experienced a similar return.
5. Set it and Forget it
I look at investing for retirement as a marathon, not a sprint, and I encourage you to do the same.
Decide that you will begin saving for retirement without getting caught up in the day-to-day ups and downs of the markets.
Make a plan to invest consistently, as much as you can, and forget about it *spoken in my best mob accent*.
Knowing that you’re investing for your future as much as you can in good quality index funds with no plan to touch your account before you’re of retirement age will help you sleep better at night and remain virtually unaffected by what’s going on in the stock market.
Investing in this way will give you a sense of freedom instead of keeping you constantly tethered to the news, worried you’ll lose your entire nest egg the next time Reddit goes wild with stock advice.
I’m comforted by the fact that I’ve done my research, and I’m confident in where my money is invested (in index funds), and I want the same for you.
You have so many other important things to focus on and worry about each day, so investing in index funds will allow you to take “worrying about my investments” off your list.
If I’ve successfully convinced you that index funds are the best investment for new investors I hope you’ll take the next step to learn more about how to set up an account and which funds are best for you.
I highly recommend you enroll in How to Build Wealth by Investing in Index Funds if you’re ready to begin investing and are completely green, already are investing but could use a refresher, or want to brush up a bit on the fundamentals.
This article was produced and syndicated by Cents + Purpose.
More From Cents + Purpose
How To Make Money In One Hour – 14 Easy Ideas
Earn in Your Spare Time
Our suggestions aren’t a get-rich-quick scheme, so don’t get too excited. However, you can do these small side hustles in an hour, in your spare time, or on weekends. Moreover, you’re only a few minutes away from learning some of the most straightforward ideas to make money in one hour.
How To Make Money in One Hour
Ready to earn more income? Keep your options open – here’s 14 legitimate ideas to try.
Sell Your Things
Clearing clutter is good, but throwing out your items may waste money. Someone may find your pre-loved items valuable, so try to make money from them! You may be surprised at how easy it is to sell almost anything you own.
Sell or Pawn Your Gold
Let us start with the highest-value items. Do you have gold jewelry you don’t wear? You may have other items made of gold, like coins or bars. With the price of gold touching multi-year highs, you can likely sell your items for a handsome profit.
How To Sell Gold
You can sell your gold and other precious metals online as well. The process is easy, but it will take longer to get paid.
Resell Pre-Loved or Unused Items
Make money by selling your pre-loved items. For example, you can sell new books, games, clothes, shoes, accessories, or furniture, to name a few.
How To Sell Your Stuff
You can hold a garage sale or market your items on online marketplaces like eBay, Etsy, Decluttr, or Facebook Marketplace. First, look at other listings to find out what others sell items of similar brand, quality, and condition. Then, price your items just below market price to make money faster.
Sell, Trade-In or Recycle Old Gadgets
Sell your old phones, fitness trackers, smartwatches, tablets, laptops, and other electronic devices for fast cash. Your old gadgets may fetch a great price if you’ve cared for them. However, make sure to delete personal details and files before selling them.
The easiest way to sell electronics is through sites like Facebook Marketplace, GreenBuyback, Craigslist, or BuyBackWorld. In addition, you can ask for instant payment on delivery via cash, Venmo, or PayPal.
You can also profit by trading in old devices at repair stores or retailers for a discount on a new one. Then, once you have the new device, sell that for a higher price than you paid.
Recycle Your Electronics
Recycling is another option for getting rid of old or broken electronics. Use ecoATM to earn cash from your devices. They have over 4,000 kiosks in the U.S. that you can find at grocery stores, malls, and other establishments.
Once they’ve assessed your phone, they will offer you a fair price, and you can instantly get paid.
Sell Your Hair
Do you have long locks that you want to cut off? Or do you always get compliments on your silky hair? Then consider selling your hair to generate income.
Healthy, untreated hair around 10 inches long is in high demand to create wigs and extensions.
How To Sell Hair
Your hair should not be bleached, dyed, permed, curled, or straightened.
It’s also vital that your hair is not damaged due to the excessive use of hair dryers, hot irons, or any other heated tools for your hair.
To get paid quickly, visit your local wig shops or hair stylists and ask if they purchase hair. You can also sell your hair on beauty websites like HairSellon and OnlineHairAffair.
Sell Your Gift Cards
Face it; you will never use that wine basket gift card your aunt got you. You don’t even drink wine! Similarly, most of us have unwanted or unused gift cards cluttering drawers and wallets. So resell them online to get some value back.
How to Sell Your Gift Cards
Visit a site like CardCash or GiftCash.
Enter your card’s details to create your listing. You can also trade your gift card for another shop card you like instead of selling it.
Card cash will pay you up to 92% of a card’s value. You can transfer the card’s value online, resulting in fast payouts.
Provide a Service
Do you like helping others while earning money? Then, try these side jobs to make money in one hour.
Pet Sitting
Turn your love of animals into a profitable side hustle. Start earning while walking or taking care of pets for busy owners.
To find paid pet-sitting opportunities, ask your friends, neighbors, or relatives if they need help pet-sitting or walking their pets. You can also register on websites like Rover and Wag to connect with more pet owners around your area.
As a pet sitter, your duties may include the following:
Babysitting
Help provide peace of mind to busy parents and get paid for caring for children. It is not for everyone, though. Babysitters are usually in their early to mid-teens and are not paid much more than minimum wage.
You must be responsible, skilled in handling children, and patient if you want to try this work.
A good character reference may help you land a job as a babysitter. Start by taking care of the kids of people you know. Then, you can use them as references if you want to continue this gig.
Become a Rideshare Driver
Ridesharing apps like Uber and Lyft are consistently in need of drivers. Car owners with free time can do this to earn extra cash.
According to Salary.com, an Uber driver in the U.S. can make up to $18 per hour. The average driver makes around $15 per hour. You can make more money if you live around major cities like New York or LA.
Try Mystery Shopping
Shopping is usually associated with spending money, but you can sign up as a mystery shopper to earn money. Apps like Field Agent and Gig Walk will pay you to become a mystery shopper in your local area.
Mystery Shopping Duties
As a mystery shopper, you will pose as an ordinary customer and visit retail stores to:
Do Yard Work
Do you have the skills to whip someone’s lawn into shape? Grab your lawn mower or rake and ask if you can clean your neighbors’ yards for hourly pay. Tasks may include lawn mowing, trimming hedges, or preparing flower beds.
Yard labor can be physically demanding. Therefore, be prepared before applying for this position.
Shop for Groceries
Grocery shopping is another job you can do to earn extra money in an hour.
Instacart is a grocery delivery platform that lets you shop for other people’s groceries.
To become a grocery shopper, you must have good eyes for spotting fresh produce and good products. Take note that you must be at least 18 years old and have access to a vehicle to be recruited for this position.
Start a Delivery Service
Deliver meals, groceries, prescription medications, dry cleaning, and other supplies. DoorDash says their ‘dashers’ make around $25 per hour, including tips. Additional delivery services you can try are UberEats, GoPuff and Postmates.
You can cash out daily with both UberEats and DoorDash. You can also keep 100% of the tips, which can add up quickly.
Become a Handyman
If you are good with tools and like to do repairs around the house, turn that talent into a money-making venture. You can find jobs near you on Craigslist, TaskRabbit, or HomeStars.
Sign up for anything you are good at, such as:
Try Online Freelancing
Freelance work is an excellent way to make money from home. If you are an expert in writing, graphic design, social media marketing, photography, translating, or any other digital skills, you can make money in your free time.
Become a freelance writer, graphic designer, or social media manager. Use your digital marketing skills to make money in your free time.
How To Find Freelance Gigs
Create an account and look for gigs that match your skills on websites like Upwork and Freelancer. On Fiverr, you can create your gig, set your prices, and let your target audience find you. You can also go to Reddit and browse r/ForHire or r/slavelabour threads for microtasks.
Landing a gig may take some time, but you can complete some jobs quickly and get paid hourly.
You can also ask friends, family, or local business owners who need help with online work or your skills to hire you. Their testimonials about your service can be helpful when you start searching for more clients.
Which Ones Are You Going To Try?
If you have limited time and are looking to earn some cash, there are many ideas for making money in one hour.
You can offer digital services online, sell your valuables or used items, deliver items, drive for rideshare services or provide services in your local area.
It is easier than you think. You can even combine a few money-making ideas above to maximize your earnings. The only question is, which ones are you going to try today?
Ash and Pri
Ash & Pri are the founders of AshandPri.com, where they empower readers to make smart money decisions across all aspects of life. After achieving their FIRE goals in their 30s, they launched their blogging business in late 2021 and scaled it up quickly to generate a consistent income within a few months. You can find their expert financial advice & tips featured on sites like Forbes, GoBankingRates, Apartment Therapy, MSN, and more.
Share on PinterestShare on TwitterShare on Facebook
