I consider myself fairly good with money, but for some reason I ma always confused on the best way to invest.
I am 30 years old and up until now any extra money has been going to my savings account at my local bank. Now that I've hit my 6 month emergency fund and am maxing out my IRA and 401K, I want to know how best to handle my investments. I have about $250 to invest per month, but I'm unsure of the best way to do this. I hear on TV about ETFs and Mutual funds and how I should "dollar cost average" by putting in money continually like once per month. So here is my question: By putting in a relatively small amount per month, $250, wont I incur high fees for doing it that way? Should i instead put it into the cash account and invest it once per year? Thanks!
This is really a personal preference question. I personally prefer to invest by putting the amount into my account, and then investing it in a lump sum. I typically use that lump sum to rebalance my portfolio once or twice a year, but I've also used it to take advantage of market opportunities as well.
Here's a full breakdown of the pros and cons of investing monthly versus lump sum investing: https://thecollegeinvestor.com/1332/invest-lump-sum-small-chunks-dollar-cost-averaging/
If you want to invest monthly, there are ways to do it without incurring large fees. The two most popular ways to do it are through Betterment and Capital One Investing.
Betterment is what's called a Roboadvisor, where they will setup an ideal portfolio for you. If you commit to investing $100 per month, you pay no monthly fees, just a 0.35% annual fee on your account value until you reach $10,000, then 0.25% after.
Capital One Investing (formerly Sharebuilder) is an online broker that has an automated investing plan, where if you commit to automatically invest each month, you can have $3.95 commissions for each investment. However, they also offer a lot of no-cost ETFs and mutual funds, in which case the investment is free.
For your investment in stock market try to check global economy by 2030 which is another rate cut by Fed in 1H2020 for your future investment.
You can try investing in bonds but thats pretty low risk/low return. I would personally check out some solid companies, maybe Tencent or Nordstrom. Try big companies which give a solid return so you dont worry.
First, six months in an emergency fund is nothing. Bump it up to nine or 12 months. Many experts throw this 6-month number around, but it's not realistic. If, God forbid, something really adverse happens to you (job loss, disability, a relative needing help, etc.), you wouldn't survive with 6 months.
Second, go with ETFs and do automatic investment. The fees are way lower than on mutual funds, and ETFs give you great diversification. You're in your 30s, so you got plenty of time to enjoy double digit returns over, say, 20-30 years until retirement.