How to invest: Where do I start investing?

Investing is scary, but it doesn’t have to be. The fear is often misplaced and misjudged, due to a misunderstanding. With all of the tools available to us today, you can invest like a pro.

Stocks can change rapidly, depending on your age, you should pursue other forms of more stable investments such as retirement funds. If you have time, then this is for you.

The stock market is not a guaranteed return. Investing your money in the stock market is still a risk. However, you can minimize the risk by educating yourself.

This information is to educate you on the fundamentals of investing in your future and should not be taken as investment advice. All investments carry risk and those risks should be considered before making any decisions.  Please seek personal financial advice if you are unsure.

Why should you invest?

The simple answer is to build wealth. How you create wealth is up to you.

But here are some facts:

  1. If you view the history of the stock market, you’ll see that continues to improve.

The market dips and then improves. Instead of numbers, look at this chart as the productivity in the United States. When you invest in the stock market, you’re betting that America will continue to thrive.

Instead of buying single stocks, you can invest in a mutual fund. Mutual funds allow you to invest in multiple companies at once. They offer more reliability than investing in a single stock. When you invest in a single stock, you’re betting on the success of a single company.

The research you do will help you determine if you’re investing in the next Amazon or the next Sears. But we have something that those in the 1960s didn’t, the internet. Do your research on a specific company, because today, everything you need to know is online.

  1. Inflation is the increase in the price of goods and services. On average, the rise is about 3% a year, which means if inflation this year is 3% next year the products or services will cost an additional 3%.

The average savings account has a .06% APY. The inflation rate for 2018 was 2.44%. Every year, you lose 2% to 3% of your buying power as the consumer. Your money should be growing 2% to 3% every year to combat the difference.

On average the long-term stock market returns are 10%. The gains in a year are far from ordinary, as seen in 2008, the stock market can take a dip. Some years, the stock market may experience growth that is highly above average.

Over the long-term, the losses you experience can recuperate, but do you have the time to wait?

  1. Compound interest will grow your money. Over time, small things add up and make significant changes. Investing isn’t exclusive to cash. You can invest in yourself, try some investing books for beginners. The internet is full of tips on investing, read, collect tools, and add to your toolbox.

Not knowing is no longer an excuse when you have a fountain of knowledge at your fingertips. If you’re sitting in unsure waters, Anguiano Consulting can help.

What is investing?

Investing is spending with intent. More appropriately it’s spending with the purpose of a future return, one that’s higher than our current spending.

We invest time by reading to further our mental development.

Eating healthy and working out is an investment for our health as we age.

The point is we already invest. Whether the investments you’re making are good or bad is a different story altogether.

Investing is best utilized with time, the earlier you start, the better.

The money you earn on investments begin to make money, and that money earns money. After 20 years your payment has been working for you.

Diversify your investment strategy

According to Warren Buffet, “Diversification is a protection against ignorance. It makes very little sense for those who know what they’re doing.” Education is key.

Diversification in the stock market is suggested against by top investors such as Warren Buffet and Bernard Baruch. However when it comes to your overall ‘Wealth Building Strategy,’ don’t put your eggs in one basket.

Where can you invest other than the stock market?

That’s right. You can invest in your 401(k).

A 401(k) is an employer-sponsored plan for retirement savings. If your employer offers a match, you should at least invest that number. If your employer offers a 4% match, invest at least 4%, it’s free money.

Taxes aren’t paid initially with a 401(k) but are on employer contributions, your contributions, and the growth when you make withdrawals in retirement.

Another option is Roth 401(k), Roth 401(k) is another employer-sponsored plan for retirement. Unlike the traditional 401(k), your contributions are after tax, you don’t pay taxes on the growth, only on your employer contributions and your initial contributions.

There is an annual contribution limit for both. In 2018, Roth IRA had a limit of $5,500 or $6,500 if you’re age 50 or older. For traditional 401(k), the contribution limit was $18,000. Those 50 and older can add an extra $6,000 per year as a ‘catch-up.’

Your 401(k) plan is usually invested in different ways, dependent on your 401(k) strategy.

Your 401(k) is most likely invested in mutual funds but can be a combination of stocks and bonds also. You will have to check with your employer on the specific plan.

5 tips for investing like a pro

Pay yourself first.

Most of us don’t invest because we don’t have the funds available. Instead of budgeting for investments or spending whatever’s ‘left over.’ Invest first, make sure that contributions to your future are the first thing that comes out of your paycheck.

Long term means long term.

The most significant factor in investing is time. Having patience with your investments can go a long way. Be willing to experience the growth 20 years can bring to your finances.

Have an exit strategy.

Having a plan for investing is just as important as having a plan to secure your investment returns. You won’t be in the market forever, and at age 70, you might not have another thirty years to watch your investments grow. If you’re unsure, always consult with a financial advisor. Anguiano Consulting can help advise you and assist you with an economic strategy.

Avoid emotional decisions when it comes to your finances.

The market will swing but don’t let your mood turn with it. You might be tempted to sell your stocks in a bear market but remember the facts. Your money will grow, and it will continue to grow as long as you leave it alone.

Do your research.

Don’t invest in something you don’t understand. I’ll repeat this advice again and again. Do your research or ask a financial advisor. If you have any economic questions, you can always contact Anguiano Consulting. The only costly question is the one that you don’t ask.

Common investing terms

Don’t invest in anything you don’t understand. We no longer live in the age of magazines and television. Don’t take information at face value when you have the answers at your fingertips.

Mutual Funds

These allow you to invest in multiple companies at once. Mutual funds have teams who choose companies to spend in. These are usually the safest way to invest in the stock market. A mutual fund spreads your investment through multiple companies if one company fails you’ll have investments in others.

Single Stocks

Single stock investments are an investment towards the productivity of the individual company. Investing in a single company is dangerous, if the company fails, you lose your investments.

Exchange Traded Funds (ETF)

ETF’s track a stocks index, a commodity, bonds, or a basket of assets. Most ETF’s track stock indexes, such as the S&P 500.

Certificates of Deposits (CD)

A CD is similar to a savings account and allows you to save your money at a fixed interest for a set amount of time. If you withdraw money before the CD reaches its maturity date, you’ll pay the penalty.


Bonds allow companies to borrow money from you. You earn a fixed rate of interest on your investment, and the company repays you when the bond reaches its maturity date.


A dividend is a payment made to the owner of a stock or bond. A company may pay quarterly dividends based on a percentage of annual income or any excess cash flow.

Fixed Annuities

Insurance companies sell these accounts and give you a guaranteed income for a certain number of years in retirement.

Variable Annuities (VA)

VAs are insurance products that give you a guaranteed income stream and death benefits.

Real Estate Investment Trusts (REITs)

REITs sell shares of real estate to investors. The investors receive a portion of the income from the company’s real estate investments.

Separate Account Managers (SAMs)

These are third-party investors who buy and sell stocks on your behalf.

Apps that let you invest for free

There are more apps than the ones I listed, but these are free.


M1 Finance

M1 allows you to build a free portfolio of stocks and ETFs. They offer preset portfolios for you to use if you’re unsure how to start. These allow you to invest in individual, joint, retirement, and trust accounts. M1 finance makes investing easy for beginners.


Investing in Fidelity allows you to open an IRA with no minimum and no maintenance fees. Fidelity offers a range of commission-free ETFs so you can not only invest for free, but there are no management fees.


Steal from the rich and give to the poor, not really but this app allows you to buy and sell stocks for free. Consumers can buy stocks at market price, but it doesn’t allow you to purchase fractional shares.


You won’t pay any commissions when you buy and sell Vanguard ETFs. Vanguard recently announced that they would not charge a commission on a large number of competitor’s funds and ETFs. Vanguard is known for being a low-cost service provider.

Bottom line

Anyone can invest, but the key is to start as early as possible.

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