The hoe’s beginner guide to investing
I am NOT an expert by any means, but in the two years or so since I started investing I’ve made a pretty decent amount on the stock market. Also I think it’s super important for everyone (but especially sex workers) to get comfortable with the stock market. Whether you want some passive income or you’re planning for retirement, you’re going to get a lot more out of putting your money in the stock market as opposed to that money sitting in your bank account or safe where it’s actually depreciating in value due to inflation. Be a smart ho and have your money make money for you!
It’s kind of daunting to start investing if you’ve never done it before, but everyone starts somewhere. Personally, I use Fidelity but you can google any brokerage firm and lots of different places will come up like Vanguard, Charles Schwab, and TDAmeritrade. It should be noted, however, that each of these firms charge fees to make trades. Meaning every time you buy or sell a share of stock or other secuirty, the brokerage firm will charge you a commission fee, usually $5+. A really great app for beginners is Robin Hood. They don’t charge any fees at all which is awesome for newbies. However, when you start an account with a big firm there are lots of benefits that Robin Hood doesn’t have, such as no fee mutual funds/ETFs and investing/retirement advice. Consider your options and pick the right firm or app for yourself. More info: Robinhood
What kind of account should you open
This depends on what your goal is. If you just want to play around with investments a bit and want to be able to take your money out when you want you can open a standard brokerage account. However, it should be noted that any profit you make from this account will be taxed, as standard brokerage accounts have no tax benefits and are taxed as regular income. Personally I’m a big proponent of Roth IRAs. This is a type of retirement account that is basically tax free money when you withdraw it (after age 59 ½, before that you get penalized because this type of account is designed to be taken out when you’re of retirement age). You wont get a tax deduction when you contribute to it but when you take it out in 30-40 years all that money will not be taxed. I encourage everyone to open one up. Tax free money is good money! There’s also another type of IRA that’s called a Traditional IRA it is similar to a Roth IRA however it is tax deferred. That means that when you contribute to it, you get a deduction on your taxes but when you take it out you will be taxed on it. The limit for BOTH IRA accounts is $5500. So that means between your Traditional and Roth you cannot contribute more than $5500 per year. More info: 7 Advantages of Investing in Taxable Accounts, Traditional IRA vs. Roth IRA, Tax Benefits of a Brokerage Account vs. Roth IRA
So you picked a firm and an account type, what now
There’s lots of different securities you can invest in but I’m going to cover the four most common and ones I personally understand the best: stocks, bonds, mutual funds, and ETFs.
Stocks: Investing in stocks is a great way to start your portfolio. They’re probably the most common security, even people who have no idea about investing know the term “stock market.” Buying a share of stock is like buying a little piece of the company. So when they’re doing well and making a profit you get a little piece of the profit as well. Before buying a stock it’s important to do your research. I suggest starting out buying stock of companies you already know and trust. Do you use your Visa card a lot? Look into their stock price! Go to Walmart a lot? Same idea. If you’re a new investor you want to buy stocks that are already well established companies and you know you can trust (so far as their financials go, ethically is a different story). Google the company and see if there’s been any scandals recently. Look at their financial statements (google the company + “income statement”) and see how they are doing financially. Are they turning a profit? Do they have a lot of debt? Look at the past stock price (google the company stock ticker and Google will come up with a graph of their stock price). Has it been steadily going up? Or is there wild swings up and down? You want to stay away from volatile stocks until you understand the stock market a little better. More info: Understanding the Income Statement, How to Invest in Stocks, Stock Basics Tutorial, The Complete Beginner’s Guide to Investing in Stock
Bonds: A bond is basically a loan you give to a company (or government) with the promise that they will pay you back your original amount plus interest earned. Like when you take out a car loan from a bank except you’re the one loaning the money. The good thing about bonds (especially from the US government or another big, successful institution) is that it is very low risk. But with low risk comes low rewards. Bond interest rates are typically much lower than the rate of return on other securities. For this reason, I don’t own any bonds. My approach to investing is aggressive growth, but that doesn’t mean bonds are a bad investment. Quite the opposite actually. Especially for investors who want to be a little more conservative with their money. More info: How to Invest in Bonds, How to invest in bonds: a beginner’s guide
Mutual funds: Mutual funds are a great way for new investors to make money but not put in a whole lot of effort. They’re basically just a huge fund that multiple people and groups put money into so the managers can buy and sell securities within them. Basically, you buy into a fund and professional fund manager manages the securities (bonds, stocks, etc) within it so you don’t have to manually buy and sell share yourself like you would with regular stocks. A few things about mutual funds: a lot of them have a minimum investment amount, usually around $2500 (although some firms have mutual funds with starting investments at $500 but they’re not as common). Which seems like a lot but a mutual fund is one of the most secure and stress free ways to make money on the stock market. After you invest the initial $2500 you can continue to invest any amount you want. Let’s say you bought $2500 and now you just want to invest another $100 into the fund, you can do that. It’s important to research the fund as well. This is where having an account with a brokerage firm will come in handy, many of them have their own mutual funds that you can buy into for no extra fees. When you’re researching mutual funds look at the past history, how much risk is involved (most brokerage firms will rate the risk on a scale), how many times the fund manager has changed (you want a fund with a steady manager). You also want to look into the top holdings. Most funds will be grouped based on category. So one might be a tech centered mutual fund, one might be emerging markets, one might be medical devices, etc. I’ll go into diversification in a bit. Another type of mutual fund is called an index fund. These funds basically track the overall growth of the market. So they’re not super profitable but they’re normally pretty stable (assuming the market is stable, but I’ll go more into that later). More info: Trading Mutual Funds for Beginners, 5 Mutual Funds to Get You Started, How to Get Started Investing With Mutual Funds
ETF’s: An ETF is like a mutual fund that trades like a stock. ETFs are similar to mutual funds in a lot of ways. Most of them are index funds that track a certain market or sector’s index. There are some key differences however. Number one, since they’re based on an index they’re not actively managed like a mutual fund, meaning there’s lower fees. Number two, there’s no minimum investment like there are with mutual funds, making them a great investment alternative for someone who doesn’t want to put up $2500 right away. There’s also various other differences like options trading and short selling but that’s beyond the scope of this guide. If anyone wants to learn more about those I’ll include some links below. As always, just like with stocks, bonds, and mutual funds, research ETFs before you buy into them. Know what you’re getting yourself into! More info: Why Invest in ETFs?, 3 Top ETFs for Beginners, 7 Best ETF Strategies for Beginners, Options Trading, How to Sell Stock Short
This really depends on your income, bills, savings goals, etc. DO NOT invest anything you can’t afford to lose. Take care of your rent, utilities, emergency savings, etc first. Let’s say you have $5000 saved up (aside from your emergency fund) and it’s just sitting in your savings account earning 0.5% interest. You could take half of it and play around on the stock market a bit. Even if you don’t make 7% in the first year you’re bound to get a better rate of return than that savings account is giving you. Even if you only have $500 to start with that’s fine too! Whatever you feel comfortable with potentially losing, especially while you’re first learning about investing. More info: I Make $50K a Year: How Much Should I Invest?, Saving vs. Investing Money
Diversification is basically like insurance for when certain sectors of the market take a dip. You don’t want your whole portfolio to consist of one type of stock or even securities from just one country. I’ll give you an example. Let’s say your portfolio consists of a share of Apple, a share of Samsung, and a share of Google. These are all well known, profitable companies so you may think you’re doing great. But then there’s a scandal in the tech world or one of the materials they need to make processors spikes in price. Now the whole tech sector is experiencing a slump. Because that’s all your portfolio consists of, you’re basically putting all your faith in one sector of the economy which is bound to have dips (every sector will). Now if you invest equally in the tech, energy, and industrial sectors, when one isn’t doing so well your portfolio won’t take a huge hit. It’s the same with only holding securities from the US. When the Cheeto in chief does something stupid, US stocks may slump. You can counteract this by investing in different countries and emerging markets. Recently I’ve invested in Chinese, Japanese, Korean, and European markets to offset whatever damaging effects our president is doling out. This is where mutual funds and ETFs come in handy. A lot of them are already diversified. If you know what sector you want to buy into you can google “emerging markets mutual fund” and a bunch of results will come up that you can research from there. Don’t be afraid to branch out into up and coming markets. More info: The Importance Of Diversification, Here’s Why Diversification Matters, 5 Big Mistakes Investors Make When They Diversify
Holy shit the stock market is tanking what do I do
First of all, don’t panic. The market “ebbs and flows.” There are great times in the market when it’s peaking and then not so great times when it’s dipping. The good news is, if you’re a long term investor, the ebbs and flows won’t matter much. Even in the event of a recession. For example, yes in 2008 people lost a LOT of money in the stock market. However, 10 years later many long term investors have made up those loses and have made even more money since then. It’s also important to note that not every dip in the market means there’s a recession coming. Warren Buffet (who’s probably the most prolific investor of our time) always advises to hold instead of just sell sell sell immediately when things go south. Let’s say you buy a share of stock for $100. Two months later it’s down to $50 so you freak out and sell it for a loss of $50. Then three years down the line it’s price is $300. Had you held it you would’ve profited $200. Now, not every stock is like this. And if you see you’re losing money and the stock is not rebounding with the market as a whole, you should consider selling. But I prefer to hold and wait things out to see how they go. A good idea is to set up a stop loss order for your securities. Basically you pick a price and when that security drops below that price, your brokerage will automatically sell it for you. So you don’t have to constantly be monitoring it. Another good thing about downturns in the market is it’s basically when everything is on “sale” so to speak. Stocks drop in price so it’s a good idea to get in while they’re cheap so when the economy is doing better you’ll make money. Be wary of stocks that are tumbling downward very fast though. Again, look at their financials and google google google them. See what the experts are saying about this company. More info: How to Deal With a Stock Market Drop, Why The Stock Market Sold Off, And What You Should Do Now, The stock market is dropping—here’s what you should do
I know this is a long guide, it’s a lot to read through. Don’t get discouraged. It’s good to be well prepared and knowledgable about the stock market before you jump in or else you may lose a large sum of money (well, you may lose a large sum of money anyway but that’s beside the point). If you’re not 100% comfortable investing real money there are several investing “games” where you are given something like $100k in fake money and trade stocks at their actual values. I started doing this when I was 15 (before I had any real money to trade with). It’s a great way to get your feet wet with no real risk and get comfortable with the trading aspect. I recommend MarketWatch. Also realize that investing advice is not one size fits all. Some experts will disagree on certain strategies, stocks, outlooks, etc. It’s important to take everything you read about investing with a grain of salt (including this guide!) A smart investor is an informed investor who knows what they’re doing. Remember: research, take your time, and don’t invest anything you’re not comfortable losing. Happy investing hoes!
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