Some of you are off to a terrific start! Let’s look at potential accomplishments:

• You are employed or own your business and have a steady and growing income stream.
• Have paid all education loans off.
• Contributing (HOPEFULLY AT MAXIMUM LEVEL – $18,500) to your 401-K. If not at maximum level of your 401-K you are using your annual raises to increase your participation percentage in your 401K until you reach maximum amount of $18,500.
• {If you are under 50 years old, you can contribute a maximum of $18,500. If you’re 50 or older, you can make an additional catch-up contribution of as much as $6,000, for a total of up to $24,500.}
• Have fully funded your emergency savings account. I recommended a minimum of six months of cash (savings account) that will cover 100% of your monthly expenses. {You can also utilize equity non-retirement account funds for emergency purposes. Typically takes less than five days to sell equities and electronically transfer the cash to your checking or savings account.}
• CONGRATULATIONS!

WHAT ARE NEXT STEPS?

If you are NOT planning to make an expensive purchase such as a car or down payment on a home, TODAY (and I actually mean TODAY!) is the time to start investing in the stock market. I recommend you start with investing in the S&P 500 ETF Index Fund.

The younger you are and the sooner you SAFELY get in the market the faster you create wealth. In my 20’s I was afraid to invest my limited HARD EARNED MONEY in stocks, bonds mutual funds etc. For three good reasons:

1. I did not understand what a stock, mutual fund, bond, etc represented. Growing up in Rose Hill, NC, (world’s largest frying pan-I kid you not) was not a likely place to hear about equity investments!
2. I had no clue how to buy any of the above, or how much it would cost. In my early investing days buying small number of shares of stocks cost $100 or more.
3. I was SCARED and wanted to protect my HARD EARNED MONEY!
SOUND FAMILIAR?

Let’s take a look at recommended actions, to get you started TODAY, investing in equity and your own future!

INVESTING IN THE S&P 500 ETF INDEX

OPEN A DISCOUNT BROKERAGE ACCOUNT

Select a discount brokerage and avoid paying high and unnecessary management fees, especially if you buy the S&P 500 ETF Index. When shopping for a brokerage, compare: buying and selling fees, minimum deposit requirements, types of investments available, and their education (on line courses, workshops, etc.) platform. I listed a few known discount brokers below. These are just a few examples, there are many more brokerage firms, and so do your research.
Select the brokerage firm that offers the features you desire, is easy to navigate and has low fees. {FYI: I have accounts at Fidelity, Vanguard and E-Trade – I am not recommending these companies, simply stating where I opened accounts over the years.

ADD MONEY TO YOUR BROKERAGE ACCOUNTYou will first make an initial deposit into something like a brokerage checking/savings account. The interest you will receive is negligible. You can fund your brokerage account with direct transfer from your savings or checking accounts, or a paper check. Most firms have electronic deposits of paper checks.

For non-retirement accounts you can add any amount you desire. However for retirement/IRA accounts, you are limited to an annual contribution (that you can spread out with multiple deposits) of $5,500. The government offers those age 50 years and up the optional opportunity to make an additional $1,000 contribution.

AUTOMATED MONEY TRANSFERS TO YOUR NEW INVESTMENT ACCOUNT

Learn to pay yourself first! The more you contribute to your investment accounts, the faster YOUR wealth grows. Easiest way to pay yourself first, is by setting up automatic deposits from your employer or your own checking or savings account.

WHERE TO INVEST YOUR HARD EARNED MONEY –S&P 500 ETF

Some of you may be anxious to begin investing in individual stocks, immediately. I advise against this for inexperienced investors. You may have read for those people smart enough to buy $10,000 of Wal-Mart, Apple, Netflix, etc. when the stock first launched, today they are millionaires. What difference does that make-we did NOT buy the stock at the IPO price!

Warren Buffett, 3rd richest man in the world with a net worth of ~$80 billion recommends starting with the S&P 500 ETF index fund, especially for anyone young or new to the market. Buffet states: “Consistently buy an S&P 500 low-cost index fund,”

WHAT IS AN INDEX FUND AND WHY IS IT A GOOD INVESTMENT?

An index fund is a type of mutual fund with a portfolio constructed to match or track the components of a market index, such as the Standard and Poor’s 500 – (S&P 500). An index mutual fund/ETF provides market exposures to several stocks, low operating cost and low turnover of shares, which reduces your tax bill.
The index fund protects us from putting all our money in one company and that company has a bad year or even goes bankrupt. By buying a fund with hundreds of stocks, you know some will go up and some down. The S&P 500 is a fund that holds stocks for the 500 largest companies in the U.S., which includes familiar names such as Apple, Google, Exxon and Johnson & Johnson.

WHY THE S&P 500 ETF?

In 2007, Warren Buffett bet $1.0 million that an S&P 500 index fund would beat the average of five hedge funds selected by the investment manager Ted Seides, over the subsequent 10 years. Ted Seides lost the bet. Over that 10-year period, the S&P 500 ETF handily beat the best Hedge fund managers.

Investing in an S&P 500 Index ETF happens to be Warren Buffett’s favorite investment tool, and mine for everyday Americans. In fact, Warren Buffett said he wants his wife’s money invested in such a fund after he’s gone. This might seem a bit surprising, as Buffett is a master in picking winning stocks. But, he believes an investment in an S&P 500 index fund is a bet on American business, which has historically been a very good bet. Over the long run, the S&P 500 has generated total returns averaging 10% annualized. And since S&P 500 index funds generally have minimal fees, you get to keep the vast majority of the returns.

START INVESTING TODAY

When you start investing in the equity markets, with an S&P 500 Index ETF, you are going to be in a much better position rather than leaving your money to languish in a savings or checking account or under your mattress. The younger you start, the more you can take advantage of compound interest and build real wealth. So, start today — open your brokerage account now and get your money in the market so it can start working for you.

CONCLUSION

Some of you are excited to get started and some may be afraid. I have tried to recommend the safest and easiest way to get started investing in the stock market, for those with limited experience. I own the Vanguard S&P 500 ETF Index Fund, and also own individual stocks, because I have been educating myself for over 30 years, with books, magazines, podcast, workshops, on line courses, etc. and learning from my own good and bad trades. I wish I had started with the S&P 500 ETF. My net worth would be substantially higher!

GOOD AND BAD NEWS

BAD NEWS – (let’s just get it over with): THE global markets, about every seven years or so has REALLY REALLY bad days. The S&P 500 Index Funds will drop by 10-40+%. Yep, it can be that bad.

GOOD NEWS: Look at the below charts, and you see the consistent upward trend over the years. We are not trying to time the market. If we are buying $500 per month of the S&P 500 ETF, we simply get more shares when the market prices is low and fewer shares when the prices are high. The BIGGEST mistake beginners’ make is they sell their equity after a steep decline when they panic. Here is the problem – when do you go back in? On average those investors who sell at the lowest points miss 50% or more of the upward rebound. The best investors, like Buffett, believe when you have a stock market crash and you see a slight uptick- you buy more! NOT SELL.

I attached the S&P 500 performance for Years: 2000 – 2015; 1990 – 2015 and 1930-2010, so you can see the steady price increase over decades and years, alone with several down years.

The best time to buy any product is when the product goes on sale. Everyone likes a great deal. But we tend to shun equities when the price is steadily decreasing. If you have done your homework you should be happy to buy when the price is lower.

Warren Buffett states: “IT’S A STRONG INSTINCT TO GET RICH FAST, BUT I DON’T KNOW HOW TO DO IT.” Listen to the Oracle!