From the people I've talked to, most whoare curious about investing don't do it for 3 reasons:
1) Short term versus long term
2) Don't want to loose money
3) No clue where to begin
1) Short term versus long term
What do you consider to be long term? For many, it's a few months, maybe the end of the year. To really see the power of investing, we'll define long term as decades, which allows us to take advantage of volatility in the markets. Investing is so powerful because it makes the power of compound interest beneficial for you (most people experience it negatively - credit card debt). Compound interest is not quick, but it is very powerful, and will result in your money making more than you do with a paycheck. You must know that around year 5 or 7 is when you can expect to see the difference between simply saving and investing. Considering the average US Citizen will be around for 8 decades, the earlier we start putting any spare money aside, the more powerful this effect will be for us.
Long term is 20+ years. "Investing" for less than a year, or what is being hyped, pump/dumped, or going to the extreme of the risk spectrum is what we'll call speculation. Invest before you speculate.
2) Don't want to loose money
First off, nobody wants to loose money. However, we have always lost money by doing nothing with it - and a lot of folks are learning about inflation the hard way today, just like we did in the 2008/2009 timeframe. Another way we loose money is buy purchasing things that we think will buy us happiness, but we sell later on, or trying to express a social status through luxury item spending (keeping up with the Jonses). Basically, what I'm saying is we're all loosing money, we need to find a way to replace it at a faster rate - and ideally without working any more hours or picking up a second job. This fear is not unfounded - one of major US markets (SP500) is down approximately 17% at the time of this writing, which is not atypical at all. This volatility, combined with regular purchasing of assets in the stock market, is what allows for incredible long term growth of our finances. The S&P500 has an average annual return to investors of over 10% since the 1950's. If you simply purchased the market starting in 1993, your $25 dollar investment would now be worth over $470 - without any stock picking, just buying a broad market index. That's a gain of 1,880% just for being consistent over the course of 29 years. You will NOT achieve those returns if you sell your assets.
See, volatility works for us that are trying to accumulate wealth. A share of the equity markets is a slide of the pie that represents the economy. When our GDP increases, the market value increases - and the coolest thing is today's prices are on SALE compared to the future value of the market. Buying a share gives us ownership, and thus the total reward of not only price increase, but also of dividends and return of capital as long as we own that share. Therefore, when economy that suddenly goes on sale (a market correction), we're getting access to the same returns at a cheaper price to us. This means a higher profit margin, so to speak. The whole "buy the dip", "buy cheap", etc.. mantras are true - but how do you know when you're at the bottom? Buy purchasing constantly, you will realize better gains than any attempt to buy low and sell high when compounded over the years.
3) No clue where to begin
If you're reading this and have some serious cash put aside, go find a fiduciary, but if you're starting off, this is probably going to be a great option for you.
Here's the easy part - open a Roth IRA that allows investments. Some banks offer Roth IRA's that are just savings accounts - so be aware of your options within the account. I have a self-directed account, but someone else manages my money because I buy funds. Yes, the Roth IRA is for retirement, not our monthly spending today - and that's fine, given the decades out approach we're taking. Additionally, any increase in value within the Roth IRA grows tax free, which sure beats paying an income tax.
I personally use Fidelity, but you'll be able to use any of these brokers with success. Be aware that this is considered retail investing, as it's just you - not your whole company of resounds of people putting millions into the same account together. Because of this fund fees (expense ratios) will be slightly higher, but still very reasonable at the end of the day. Just be aware of any account minimums and fees you'll be charged (Fidelity has none of either):
After this, you'll want to purchase just one type of fund - the target date fund. The target date fund is a mutual fund, which for us basically means it is professionally managed for a small fee baked into the price, and trades at the end of the day. These funds automatically account for asset allocation, are aggressive when we're young and taper to be financially conservative to preserve our wealth as we get older. We simply need to pick a fund that's closest to when we'll be 65. For me, that's (65-current age) = 28 , and then add the current year (2022) = 2050. The types of funds we're looking for are index funds with an extremely low cost (basis points) - just hit the search button on your provider's site and type in Target Date XXXX to find what you can access through them. You'll generally find the fund name to end in a 0 or a 5.
Through my Roth IRA at Fidelity, I simply purchase FHAPX, which is managed by Fidelity. The expense ratio is 0.49%, which is about average for this type of fund. Within my 401k I still use a target date fund, which has an expense ratio of 0.07%.
Once you've found the fund you're going to invest in, buy every payday, regardless of what the financial media is talking about (they're often wrong, fear mongering, and have very short memories). Try to work your way up to maxing out this Roth IRA contribution, and you're well on your way.
~Mike
Note: I receive no financial compensation from any company/product listed, and am not a financial advisor.