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First Time Investing Tips

How This POPSUGAR Editor Wins at First-Time Investing

We partnered with Vanguard to highlight why young people should get a jump on investing, and how to take the first steps toward a healthy financial future.
Like any nice Jewish girl, I had a bat mitzvah when I was 14 years old, and with the transition into womanhood came a small chunk of change generously gifted by the friends and family who attended. And like any responsible father would do, mine insisted that this money be put in a mutual fund with Vanguard and left to grow (instead of buying out all the Abercrombie & Fitch stores across the state of Florida like I would have chosen). Part of the deal was that I would continue to add, little by little, to that nest egg over time — he swore up and down that my future self would thank me for my 14-year-old self's presence of mind.

Now that I'm staring down the barrel of 30, I can't stress enough how much this 15-year investment has made a difference in major moments of my adult life (thanks, Dad!). With the help of Vanguard, that chunk of change grew and was there for me when I needed it the most — plus, I've learned how to make that investment work for me in the long-term, despite how far away retirement seems now.


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The first major milestone came when I took a job back in my hometown of Sarasota, FL, after living and working in New York City for eight years. (Hey, I was cold and needed a sunshiny break!) Unlike in big cities like NYC that provide mass transit systems, you pretty much need a car to survive in Florida — because of both the general convenience and the air conditioning. So I began the hunt for a gently used Jeep for myself and my Toy Australian Shepherd, Chicken. And like most millennials, my then-27-year-old self didn't have several thousand dollars in my checking account to drop on a car down payment. That's where my Vanguard account came into play — it allowed me to have the funds to work out a reasonable financing plan for the down payment and the subsequent monthly payments, which I never would have been able to swing otherwise.

The second event came not long after, when Chicken had some health issues and had to be taken to the emergency vet multiple times over the course of about a year. Anyone who has a pet and has had the unfortunate experience of visiting the ER vet knows it's both emotionally traumatic and a big hit to your bank account. Even though I had pet insurance that helped soften the blow, each visit cost upwards of $1,500 — which you have to pay out of pocket, up front, before you take your fur baby home. I would have pretty much gone broke if it weren't for the monetary cushion that my Vanguard account provided. It was so comforting knowing that I didn't have to choose between my dog's health and paying my rent, because I had made an investment all those years ago.


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While my investment has so far paid off in the short-term, I've kept up the incremental additions to the account over the years — and will continue to do so — in order to look toward my long-term future. Securing your financial future, for events from buying a house and starting a family to retirement and any unexpected life event in between, isn't something to be pushed to the back burner (sorry, millennials!).

Both for my own education and to help other young women get a jump on first-time investing, I tapped a Vanguard investment professional to break down all the essentials in laymen's terms. Read on for the insider tips!


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Q: What's the first step to take when looking to invest? What’s the number one thing to know?

A: Investing can be nerve-wracking, so you have to find a financial advisor or financial company that you can trust, especially if you don’t plan to become an expert investor or constantly monitor your money. It’s sad but true that some players in the financial industry have not always acted ethically and with integrity, and some parts of the financial industry are simply set up to enrich themselves, not their clients. The good news is that there are also some companies that have built a reputation for being trustworthy and dedicated to their clients. Just make sure to do your research. Investing is the absolute best way to reach your biggest financial goals, but it isn’t risk-free! However, you can reduce your risk by sticking to some basic principles — not by constantly trying to outsmart the markets.
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Q: What's the difference between a stock, a bond, and a fund?

A: Let's first start with the differences between a stock and a bond. Here's a basic definition of the two: When you buy a stock, you own a piece of the company that issues it. Unlike stocks, bonds don’t give you ownership rights. They represent a loan from the buyer (you) to the issuer of the bond. As a new investor, the main things you need to know are: stocks generally have higher returns over long periods of time, and bonds generally don’t swing in value as much as stocks. So if your main goal is to increase the worth of your investments, and you have a lot of time over which to accomplish this, most of your investments should be stocks. If your investment goal is coming up sooner — or if you seriously can’t handle the roller-coaster ride that stock investing can entail — then you probably want a more balanced mix of stock and bond investments.

If you buy only one stock — or a handful of stocks — the possibilities for what happens to your investment are almost infinite. The company may invent a miracle product, and you could increase your money a thousandfold. The company could plug along not doing much of anything, and your investment stays flat. Or the company could go bankrupt and you get back pennies on the dollar. It’s impossible to predict what any one stock will do — even for experts.

This is where funds — mutual funds and ETFs (exchange-traded funds) — differ from stocks and bonds: They hold many stocks or bonds. They can even hold thousands! Over time, the value of stocks as a whole (which is what the “stock market” is) has gone up. So, bottom line, a fund that holds a lot of stocks or bonds mitigates the risk of a single company going bust.


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Q: Why should you start investing at a young age (i.e. your 20s or 30s)?

A: The number one thing that’s going to impact the return you get on your investments is time. If you get a return of 6 percent a year, your money will double about every 12 years. So every 12 years that goes by without investing, you’re losing a chance to double your money.

For example*, if you start by investing $10,000 at age 20 and never invest again, you could have almost $175,000 by age 69. Don’t start until age 27, and that number drops to $115,000. Age 34? $77,000. But even if you’re well past your youth, you can still make the math work! You’ll just need to increase the amount you’re investing every year if you want to hit millionaire status.

Credits: Photography: Matthew Kelly; Art Direction: Samara Grossman; Hair and Makeup: Brett Jackson; Production: Andi Nash; Prop Styling: Lisa Lee; Wardobe Styling: Emma Sousa; Models: Aviel Kanter & Chicken Kanter

* This hypothetical example does not represent the return on any particular investment and the rate is not guaranteed.

All investing is subject to risk, including possible loss of principal. The experiences of these Vanguard clients may not be representative of the experience of other Vanguard clients and are not a guarantee of future investment performance or success.

For more information about Vanguard funds, visit vanguard.com or call 1 (800) 528-4999 to obtain a prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information about a fund are contained in the prospectus; read and consider it carefully before investing.

2019 The Vanguard Group, Inc. All rights reserved. Vanguard Marketing Corporation, Distributor of the Vanguard Funds.
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