Using Acorns to Start Investing
Investing is a personal decision, and there are many choices you have. If you’re early in your career and still have student loans, you might want to pay them off before investing your extra income. First, make sure you have an emergency fund of three to six months income. As we all found out last year, when there were widespread furloughs and layoffs, you never know when you might be jobless.
Once you have your emergency fund built up, the next thing is to tackle high-interest debt, such as credit cards. Next, you’ll want to start looking at your other debt. For many medical professionals, this most likely includes student debt. There are a few strategies that you can use to help decide if you want to pay off your student loans quickly or stretch them out. First, look at is your interest rate; if your student loans have a low-interest rate, you might be able to earn more by using that money as an investment. For example, if you are paying 3% interest on your student loans but can earn 8% by investing, you’ll get 5%.
The math is easy, but the decision to pay off your loans is not. Investing is a long-term decision, and you can’t guarantee your returns. Your money is not going to grow overnight and often can decrease on a day-to-day basis. Student loans can be psychologically draining as you look at your balance each month. The freedom of having your loans paid can make it worth it to rid yourself of the debt instead of worrying about the stock market.
Once you decide how you’re going to deal with your debt, the next step is to begin saving so that you can invest. The first place to invest is in your 401k or another retirement account, where you will receive tax benefits from saving. In a traditional 401k, you won’t get taxed on the money at present. In a Roth account, you’ll pay taxes now, and the growth on your account will not be tax-free. At a minimum, you should contribute enough to get the full match from your company. The IRS maximum contribution limit for 2021 is $19,500 into a 401k, not including what your employer contributes on your behalf.
Now that you’ve made it this far, you have emergency savings, you’ve eliminated your debt (or have a plan for eliminating it), and you’re contributing to your retirement savings. You now have some extra money that you’d like to start investing. It’s always good to speak with a trusted financial advisor no matter how much experience you have in investing, but if you want to start investing some of your spare change, Acorns is an app that allows you to do this. It doesn’t take a lot to open an account, and it lets you start investing on a small scale.
It uses the idea of saving your spare change. When we used to use cash, one way to save was to take any coins when you spent dollars and put them in a savings jar. Over time that jar would fill up with all your extra change, and you could use it for a special purchase. You can get started by clicking the link below.
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Acorns offer a micro-investing app that helps people save and invest for their future. Over 3 million Americans use Acorns to help set aside a little from their everyday purchases. VIP: Get $10 when you sign up for Acorns.
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