How to Start Investing the Easy Way (3 Steps)

Overview:

Starting to invest early in life is one of the easiest, accessible, and best ways to build wealth. However, most people think investing is a complicated, fast paced, and time involved. It has never been easier to start investing than it is today. We’ll go over a simple way to create a set and forget investment system where you won’t even need to think about it.

Steps:

  1. Create an account
  2. Link your bank account
  3. Setup deposits

1. Create an Account:

A brokerage account is an investment account where you will buy and sell stocks and funds. There are many different brokers to chose from. However, we feel none of them have made it easier than betterment.com┬áto get started investing if you’re new.

Benefits of Betterment:

  1. Very simple to use
  2. Tax smart investing
  3. A goal based investing system
  4. Betterment builds a portfolio for you so you don’t have to make any investment choices
  5. Betterment’s portfolios are built by experts, using noble prize winning techniques
  6. Dead easy to use set and forget investment account
  7. Very cheap with a 0.25% annual fee
  8. Allows partial shares which means every penny is put to work in your account

Let’s make a Betterment account. First visit betterment.com and click “Get started” at the top right of their page.

Betterment will start to ask you a few questions to better understand your current financial situation. The questions are:

  1. Are you currently retired?
  2. How old are you?
  3. What is your annual pre-tax income?

Betterment will then generate a list of recommended accounts and portfolios for you. The simplest one is the “General Investing” account so we will pick that one by clicking “Select this goal”. This goal is the most flexible one.

Betterment will now ask you for your email address, and to create a password. This will be your credentials for logging into your Betterment account. After that, Betterment will ask you for some personal information. Including your name, address, phone number, date of birth, and social security number. Note that Betterment is required to collect this data to comply with the Patriot Act. Betterment takes your security very seriously and you can rest assure that your data is secure. Betterment will now ask you for your employment status.

After your employment status, Betterment will ask you for your tax filing status, annual income, federal tax bracket, and total investable assets. Betterment asks this information because they invest your money in a tax smart way. Betterment will now ask you a few regulatory questions. Most people will answer no to all 3 of these questions.

After the regulatory questions, they will ask you to fill out some security questions. Once these questions are answered, your account is successfully created! Now to link your bank account.

2. Linking Your Bank Account:

Betterment uses a service called Plaid to link your bank account. You need to link a bank account to Betterment to be able to transfer cash to your Betterment account. Plaid makes it as simple as it can get to link your bank account. If you aren’t prompted to link a bank account during signup, you can link one manually by clicking settings in the bottom left hand corner, then clicking on bank accounts.

Plaid allows you to link your bank account using your login credentials from your bank. Note that Betterment only allows you to link 1 bank account for security reasons. You can change the linked bank account at anytime, but can only have 1 actively linked bank account at a time.

3. Setup Deposits

If you weren’t prompted to setup deposits, you can do so by clicking on your goal at the homepage and selecting setup under auto-deposits.

Betterment will then ask you for the frequency and amount you would like to auto deposit. Note that when investing, consistency is key. Invest what you can afford to. Even if that amount is just $10 a week for now, it will add up overtime!

After this page, Betterment will display a confirmation page. Check the details and then setup the deposit!

You’re done!!! You are now an investor in a selection of funds that Betterment has selected and catered to your needs. You don’t need to think about the investment process at all. You can now rest assure knowing that your dollars put into Betterment are working hard to earn you more money, and build your wealth overtime.