The No. 1 mistake this self-made millionaire sees first-time investors make |
Stashing money in a tax-advantaged retirement account is a great way to get started as a beginning investor, says Tori Dunlap, self-made millionaire and founder of financial education platform Her First $100k. But people tend to make a common mistake once they've opened and funded an account, she says. They don't actually do any investing. "If you just put your money into something like a Roth IRA or a 401(k), it's in financial purgatory," she says. "It's just sitting there as cash ready for you to invest. You are not invested." What novices may not realize is that starting a retirement account is a two-step process. First, you have to open and fund an account. From there, you add investments, such as mutual funds or exchange-traded funds, to your portfolio. "It's like a gift card. You put money on a gift card and then you have to go buy things," Dunlap says. If you're investing for a long-term goal, investing experts recommend building a core portfolio from diversified, low-cost mutual funds and ETFs. If choosing funds isn't your thing, consider a target-date fund, often a default choice in 401(k) plans. These all-in-one mutual funds hold an asset mix that grows more conservative as you near the year you expect to retire. |
Next Gen Investing: Test your knowledge with our crypto quiz Bitcoin launched in 2009, and 14 years later, the market for cryptocurrency has exploded to more than 15,000 digital coins, according to crypto.com. It's been a bumpy ride of late, however. The industry that was once valued around $3 trillion shed about $2 trillion last year, in what has been dubbed the "crypto winter." If you're still bullish on crypto's long-term prospects, you could view this as a time to buy. After all, if you think bitcoin is likely to eclipse its November 2021 high of $68,000, today's price tag of about $28,000 seems like a bargain. But caution is key: Crypto is a complicated marketplace, and anyone interested in investing needs to know their stuff. Before you even consider it, see if you can pass our quiz on crypto basics. Here's a hint: With some notable exceptions like Amazon and Apple, bitcoin has a higher market cap than most major companies, including Netflix. |
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Money Tip of the Week: Automate investments to build wealth |
Managing your money in your 20s often means trying to find a balance between financial priorities competing for attention. That's why Ramit Sethi, the host of Netflix's "How to Get Rich," recommends putting at least one important money move on autopilot. "My best advice for people in their 20s when it comes to money is to set up an automatic investment, even if it's just $50 a month, because by setting that number up, you are setting yourself up for a very bright future," he says. Even if you have a tight budget, setting aside a small portion of your earnings to invest can have an outsize impact. The longer you're in the market, the more time your investments have to experience the magic of compounding interest. What's more, by investing regularly, you avoid the temptation to time the market and guarantee that you'll buy more shares of your investments when prices are low and fewer when they're high. "If you are in your 20s, you have an amazing opportunity, even if your earnings are not that high, to set up your habits right," Sethi says. "As your earnings increase in your 30s and 40s, you can just turn that number up." |
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Worth the Money: iRobot Roomba 694 Robot Vacuum — $179.99 |
I caught myself smiling at our newly purchased Roomba the other day, literally just watching it clean. Until recently, my wife and I resisted buying an autonomous robot vacuum, mostly because it seemed extravagant for our small apartment. But it works so well! The suction on the Roomba ($179.99 on Amazon) was better than I expected, easily picking up stray bits of cat litter that our old plug-in vacuum sometimes misses. And since it's automated, we vacuum our place way more often than we used to. Between that and a portable Black + Decker handheld vacuum ($57 on Amazon) that we use for removing cat hair from the couch, it's been much easier to keep the place clean. Saves us time, too. —Mike Winters, Money Reporter |
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