3 crucial tips for anyone starting to invest

Only about half of Americans (54 percent) own stocks, according to a 2017 Gallup report – and that includes individual stocks, 401(k) plans and shares in equity mutual funds and IRAs.

Interest in investing also depends on age. When it comes to millennials, a study published by NerdWallet found that more than 60 percent would rather store their retirement savings in a bank account than invest it.

Unfortunately, this means that half of Americans could be effectively giving up millions of dollars.

While the stock market ebbs and flows, over time the trajectory is upward. According to NerdWallet, the stock market’s average return, over time, is 10 percent.

NerdWallet estimates that for those millennials who store their cash in the bank rather than in the markets miss out on about $3.3 million in retirement savings. If one assumes 43 working years from college graduation to retirement that is like missing out on almost $70,000 of earnings, per working year.

So what should those who want to invest, but have not started, consider? In an interview with FOX Business, Arian Vojdani, investment strategist at MV Financial, gave some tips on how to get started.

Where should a new investor start?

Vojdani said he recommends that those new to investing first look at larger U.S. companies through exchange-traded

funds (ETF), more specifically, an ETF that tracks the S&P 500 or perhaps the Russell 2000.

What would you say to the risk-averse investor?

“If you live in fear you miss out on market growth,” Vojdani said, adding that when it comes to investing you need something to combat inflation.

For those who are concerned about a market correction, it is important to note that corrections are short lived. “If you look at history, recessionary/bear market periods last maybe a few years.” For reference, the current bull market is more than nine years old.

When it comes to how risk-averse investors should structure their portfolio, Vojdani recommends adding fixed income.

“Fixed income has a place in portfolios for those with shorter investment horizons or more conservative, risk-averse investors,” he said.

However, in a rising interest-rate environment fixed income has its own set of risks. In a rising interest-rate environment,

Vojdani recommends that investors look toward short-dated bonds, which are not as susceptible to interest-rate risk.

Adding fixed-income securities to a portfolio of stocks means less reward but also less risk, Vojdani said.

What about those who say they don’t have much money to invest?

Everyone needs to start somewhere, and if you don’t have a lot of money to start, ETFs are a great place. By purchasing even one ETF share, you can get some diversity. For example, with $1,000 to invest it is hard to get a diverse portfolio of stocks, but it is possible by purchasing ETFs.

This article was updated to clarify that Vojdani believes that recessionary/bear market periods last maybe a few years, not corrections. He believes market corrections are short-lived, typically six months at most.