If you’re planning on dipping a toe into the stock market, now might be the best time to start.
While interest-bearing savings accounts are great for growing a bed of cash you can readily tap, investing in the stock market gives you the benefit of long-term growth through market performance.
Even falling markets present an opportunity for investors, as it means that stocks are cheaper to purchase.
A workplace retirement plan is just one way to save for the future. You can also grow your balances over the long term in an individual retirement account or in a brokerage account.
You don’t need to have millions of dollars to start out, either.
“If you’re thinking about investing, there are a number of ways you can get started,” said Douglas A. Boneparth, a certified financial planner and president of Bone Fide Wealth in New York City.
1. Do your research
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Whether you’ve gathered enough money to fund an IRA or you’ve decided to take advantage of your workplace 401(k) plan, the first step should be to do your homework.
Mutual funds and exchange traded funds come with prospectuses, an informative booklet with everything you need to know about your investment’s fees and objectives.
In all, fees have been coming down. Back in 2000, the average cost of a stock mutual fund was 0.99%, according to the Investment Company Institute, a trade organization that represents mutual fund companies. As of 2018, that cost has fallen to 0.55%.
You can look up the prospectus on the asset management company’s website or the U.S. Securities and Exchange Commission’s website.
Fund research companies like Morningstar can provide you with additional information, including details on fund ratings and historical performance.
2. Look out for other costs as well
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Fund fees are just one component of the overall cost of investing.
Be cognizant of other expenses, including trading commissions, account service or maintenance expenses, and recordkeeping fees.
These costs apply to most investment accounts.
Even your 401(k) plan isn’t immune to so-called recordkeeping fees. Find out more about them in your retirement plan fee disclosure, a document that your plan’s administrator is required to provide you.
3. Go it alone or find an expert
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Decide whether you want to invest on your own or find a financial advisor.
A financial advisor can help you assess your goals and find a savings and investment strategy that’s right for you, said Boneparth.
Just be sure you perform a little due diligence first.
Ask your financial advisor up front how is he or she paid — is it through a fee you pay, or is it through commissions? Find out whether he is operating in your best interest as a fiduciary.
Dig into your advisor’s background by performing a search through the SEC’s website and through the BrokerCheck website administered by the Financial Industry Regulatory Authority, a self-regulatory organization that oversees brokers.
Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.