July 28th, 2011
Community Karma: Elle’s Easy Investing Tips for Beginners
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**This summer, we’re excited to present “Community Karma,”a weekly series featuring people just like you sharing their financial stories, personal money tips, how they over overcame hardships, and more!**
Elle Kaplan first started thinking about investing money while she was watching “Mary Poppins” as a kid.
In one scene, Julie Andrews, portraying the iconic nanny, sings a lullaby called “Feed the Birds,” about a little old lady asking passersby to feed the pigeons surrounding St. Paul’s cathedral. A bag of birdfeed costs a tuppence.
“They should’ve earned interest on the tuppence,” Elle recalls thinking during the scene.
Since then, she’s been reading and learning all she can about investing money. Elle later took it on as a career when she became an investment banker, and recently started her own firm. In her spare time, she teaches New York City high school students about the ins and outs of Wall Street.
She shared with Credit Karma some of her best investing tips for those just starting off in the stock market game. Read on!
It doesn’t take much cash…
Elle knows that, unlike her clients, a lot of the students she talks to can’t afford to invest a large chunk of change. She encourages them to start with just a small amount of cash. “You can have a diversified portfolio with just $100,” she says. She tells interested first-time investors to start with a discount brokerage firm; check out and compare a few different firms, like Ameritrade, E*TRADE or Scottrade.
…but it does take some thought.
The nice thing about discount brokerages is that you can trade your own stocks and adjust them when you want. But this also means you have to be smart about how you invest, since you don’t have a stock broker working for you. When Elle teaches high school students about investing, not only does she ask them what stocks they would invest in, but also why they would make those particular investments. For some guidance in navigating the stock market, use a resource like The Motley Fool.
It’s exciting to see your investments grow…
Elle believes that, “Every day is an opportunity to make your financial life better.” Start investing as soon as possible—after you’ve done your research—so you can start to see little gains here and there. Elle recommends that you put a system into place “so it doesn’t keep you up at night.” Set aside a specific time of the day or week to check on your investments so you don’t worry about them 24/7.
…but stocks go down, too.
Elle is wary when she hears people say, “stocks only go up.” While investing, you should expect some losses and learn from them. This is another reason why Elle recommends investing in a diverse portfolio. “Put your money into different buckets,” she says, so that when you suffer one loss, it’s less likely that the rest of your portfolio will suffer equally. Elle’s best advice when the stock market takes a hit? “You can’t panic.” Don’t withdraw your investments at the first sign of a drop. Reevaluate, read, and research to see if you should make any changes in your portfolio before making a rash decision.
Make investing a priority…
Just like with your savings accounts, your investments are important for your financial future. “Pay yourself first,” Elle says. Invest regularly so that your money is working for you every day.
…but know that it will take some time.
“If you need to access your money in the next five years, it doesn’t belong in the stock market,” Elle says. Investing typically doesn’t result in gains overnight. She suggests investing in several different stocks. Watch your diversified portfolio and make changes as you see fit. You may start to see little gains here and there, and, if you’ve invested wisely, they’ll all add up in the end. Elle reminds new investors that “very long journeys start with single steps.”