How to Start Investing

You don’t need a business degree or connections on Wall Street to learn how to start investing — all you need is the capital and an understanding of the basics. You might not make millions, but you could make a comfortable little nest egg.

When to Start Investing

Knowing when to start investing is just as important as knowing where to start investing. Bottom line: this isn’t something you should do until you’re debt-free and have at least one or two months of expenses saved as an emergency fund. Once you reach that goal, try investing around 5% of your income. That’s enough to get you motivated but not enough to wipe you out. 

One thing to note is that you should try to make those first-time investments as early as possible. Most work on returns per annum, so the earlier you start the more you’ll accumulate over the lifetime of the investment.

How to Get Started Investing

There are plenty of local businesses that can help you get started, but you should know the basic options before you do. Here are some of the most popular investment instruments: 

• Stocks: This is a share of ownership in a company that moves based on how the company’s performance is evaluated. If the company does well, you could get a dividend, or you can sell higher than you bought to make a profit.
• Bonds: This is essentially a loan to a company or government entity that will pay you back in a number of years and pay you interest in the meantime. Historically, bonds aren’t as risky as stocks because you know what you’ll be paid back.
• Mutual Funds: A mix of investments managed by an individual company. They choose a portfolio of securities on your behalf and make sure investments are diversified.
• Exchange-Traded Funds (ETFs): These are sets of securities that are not managed and therefore are less expensive. You can trade them like stocks, but they offer the diversification benefits of mutual funds.

Start Investing with Town and Country Bank and Peoples Prosperity Bank

Of course, managing a broad financial portfolio on your own can be time-consuming, especially with all the research involved to ensure you're making sound choices. Fortunately, Town and Country Bank and People's Prosperity Bank offer a broad range of personal and business financial planning services to help your money work for you. 

We have branches across Central Illinois and the Metro East, offering investment services to help with your personal or business finances. Visit your local branch to find out more.