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Start Investing Now
Here is my best advice to you about when to begin investing.
Start investing now.*
As soon as possible.
I mean like in your teens. If you are no longer that young, that’s ok; just get started wherever you are.
Start with a small amount, but something that is meaningful to you. You could invest as little as $50 at Vanguard in an ETF. Yes, the account fees (about $20 per year, plus commission costs) don’t make sense at that amount, but this is about education. I do suggest you go with Vanguard as the firm is probably the most ethical in the industry.
Start with an index mutual fund or ETF. Either will work. ETFs have slightly lower costs, but be careful because investing in ETFs (which can be bought and sold all day long like stocks) can lead to a mindset of quick trades in and out--a mug's game. I recommend you start with the Vanguard Total Stock Market Index Fund or ETF. If you are investing more than $3,000, be sure to get the “admiral shares” version of the mutual fund with slightly lower expenses. It’s important to get experience investing through full market cycles (bull and bear markets) as soon as possible while you don’t yet have a lot of money in the market. Once you have invested through two full market cycles you will have a decent amount of experience and a much better understanding of your own personal psychology.
If you are young and have earned any money during the year, make this investment in a Roth IRA account.
If you believe you are the type of person who would one day want to purchase individual stocks, bonds, or other securities, I recommend you also do this as soon as possible. Almost all of us would be better off just plowing money into the broad-based index funds or ETFs over the course of our lives. (Warren Buffett is the Michael Jordan of investing. Are you likely to be the second Michael Jordan of investing?) However, a good chunk of us simply won’t be able to resist buying individual securities as well. If that is the case for you, you want to do this as soon as possible so that you come to understand the risks and volatility associated with individual stocks, etc.
*If you have credit card debt, pay that off before you begin investing. Also, get yourself a minimum of three months living expenses saved and set aside before you start investing. It is stupid and can be very expensive to live life on the ragged edge.