BY GERVAIS MBUNKEU
You have probably watched the Wolf of Wall Street, that bombastic movie based on the true story of Jordan Belfort (played by Leonardo DiCaprio), the extravagant manager of the Long Island pump-and-dump stock brokerage firm Stratton Oakmont. Belfort rose from Bayside, Queens to the penthouses of New York City’s most exclusive clubs and hotels; only to lose it all after an FBI investigation revealed he and his associates stole hundreds of millions from unsuspecting investors.
Maybe you’ve recently come across one of those annoying CNBC articles lamenting how “Millennials aren’t investing for retirement”, or (my favorite) “more than half of Americans have less than $1000 in savings.”
If these articles and the Wolf of Wall Street(either the book by Jordan Belfort himself or the movie with DiCaprio) seem catchy to you, it’s because they are. They’re supposed to “catch” your attention. You should be investing some of your income in the stock market, and the best time to start is right now, like the Nike slogan, JUST DO IT!
“A very basic thing to know about your money is that, over the really long run, people who buy equities—stocks—will almost surely make a lot more money (if they’re at all sensible in how they do it) than people who make “safer” investments.”
-Andrew Tobias
Look, I’m not suggesting that you take everything you have in the bank right now and dump it into the stock market out of desperation. That would be an ill-advised move sure to backfire on you quicker than you can spell the word B-R-O-K-E. What I am suggesting however, is that you allocate a certain percentage of your income(10-15%) to a portfolio of stocks, ETFs, or mutual and index funds. Even if you don’t understand much about stocks, bonds, or the rest of the stock market, there are a plethora of mobile applications that literally make investing easy for all of us. You are probably thinking "what in God’s name is an Exchange Traded Fund(ETF)?"Well, according to our South African brothers and sisters, ETFs are “izinto zabelungu”{the things of white people}. On a more serious note, an ETF (Exchange Traded Fund) is a basket of investment securities(i.e. stock, bonds, trusts, index funds, etc) bundled into a fund that is traded on an exchange(i.e. New York Stock Exchange, Financial Times Stock Exchange, etc.) Remember those old compilation CDs like “Now That’s What I Call Music” or “Essential Hits Volume 58”, that used to bundle together the best songs and put them on a single CD? That’s what an ETF is, it’s that one CD with your favorite Hip Hop or AfroBeats hits on it. That one basket contains the best stocks, bonds, funds, and other securities; of a particular sector.
You can start investing today, and learn as you go along, almost all investment brokerage firms and startups offer tutorials and webinars to help new and experienced investors learn and improve their skills.
I will introduce you to four innovative companies that have made investing easier than trying to figure out whether Nigeria or Ghana cooks the best Jollof (even though it is a Senegalese dish):
Acorns
Acorns is an app designed to help users invest their spare change by rounding up purchases to the nearest dollar. How cool is that? You simply link your checking account and credit cards to the app and boom! You’re all set. The next time You buy a cup of caramel Frappuccino for $3.45, Acorns automatically rounds up the change ($.55) to the nearest dollar. Once you’ve accumulated $5 in round-up savings, Acorns will invest the money into a portfolio of your choosing.
Acorns has made signing up as straightforward as possible. To open an account, you provide the app with your age, income, financial goals, how long you’re looking to invest for, and your risk tolerance. The fees aren’t exorbitant either, Acorns will charge you $1/month for all accounts with a balance under $5,000; and 0.25% of the balance per year for accounts over $5,000. This is an incredibly low fee structure compared to traditional investment firms.
Robinhood
Robinhood is a brokerage firm that offers commission-free trading on stocks and ETFs to its members. It is a little more involved than Acorns because it requires some prior knowledge and understanding of the stock market. To sign up, you simply link your bank account to the app, transfer funds from that account to your Robinhood account and voila! You’re ready to trade stocks and ETFs. If you’re not knowledgeable of the stock market, hold off on signing up, at least until you've read our next articles on getting started in the stock market.
Once again, there are no fees with Robinhood, no commissions to pay, no minimum deposit required.
Betterment
This app is similar to Acorns, Betterment aims to take all the guesswork out of the investing process. The app uses a software and algorithms to manage your money by investing it in Vanguard ETFs, including US and international stocks, short-term Treasuries, Inflation-protected treasuries , and emerging markets stocks and bonds. Once you input your investment goals and risk tolerance, Betterment will suggest an assortment of portfolios that best suit you. The algorithm manages your investments and rebalances them over time to make sure you’re invested in the right mix of funds.
As far as fees go, Betterment currently has a promotion offering up to one year of free portfolio management. Their Digital account has 0.25% annual fee on the account balance, there is no minimum balance required to start. Their Premium account option has a 0.40% annual fee, however there’s a $100,000 minimum balance requirement.
Stash
With Stash you only need $5 to get started. The app uses information you provide to them about your investment strategy and goals to suggest ETFs portfolios you can invest in. Once you link your bank account to the app and transfer funds into the account, Stash will let you pick from 40 different assortments of ETFs. They have purposefully branded the ETFs with catchy and friendly names such as “Defending America”, “Internet Titans”, “Robots Rising” , “On Cloud Nine”, “Young Money” and “Social Media Mania” to help you choose what to invest your money in.
If you’re an activist who only wants to put their money in war and food but hates social media and internet companies, Stash got you. Stash also has a wealth of educational videos and articles on investing, the economy, and finance in general.
As you can see, investing in the 21st century has been made so easy even a caveman could do it. All he would need is a cell phone and a bank account with some money in it.
There should be no excuses for you(the non caveman individual). One of my favorite writers, the legendary self-help author Napoleon Hill once said “your big opportunity may be right where you stand.”
So when can you start investing in the stock market? Well, TODAY! Join one of those companies, start investing and learn along the way.
“Dem be plug but na we be di socket”
-Gervais Mbunkeu
___________
Follow Gervais on Social Media:
IG: @mota_loko
Snap: @lecrivainpublic
Twitter: @LIngenieurNoir
Comments