How to Know What to Invest In.

Deciding you’re ready to invest in the market is a huge financial achievement! We applaud the great financial decisions you’ve made to get you to this exciting point in your journey. Now that you’re ready to start letting your money make you money, the tough part is figuring out what you want to invest in. Rest assured—we're here to make that decision easier. Keep reading to figure out exactly where your money should go.

Kim Seon Ho as Han Ji Pyeong in Start Up (2020).

Do Your Homework 

If you don’t remember much from your freshman Econ class (who can blame you?), you need to brush up on some basic investment knowledge. Doing so will help you make sense of your options—and give you the confidence you need to pursue them. We recommend building a strong foundation of knowledge using resources like: 

     ● Online courses 

     ● Your bank 

     ● Investment books 

     ● Financial magazines, newspapers, and TV programming 

     ● Google (yes, this really is the answer for everything)

Think About Your Timeline

One of the most important things to consider as you start investing is how long you plan to invest, and when you anticipate needing to take the money back out of the market.

Think of it this way: if you’re in your 20s and have decades to let your portfolio grow, your strategy is going to be a lot different than if you’re in your 50s and plan to retire in the next ten years.

Thankfully, using an investment calculator can help you run different projections based on your estimated timeline.

Bae Suzy in Start Up (2020).

Understand Risk vs. Reward

Markets rise and fall, meaning nothing is guaranteed when you invest your money. Although there are a lot of factors you can control, there’s always the possibility of the unknown. This means you need to think about how comfortable you are with financial uncertainty as you decide how to manage your money. In the financial world, you’re either:

● Risk-tolerant – If you’re risk-tolerant, you don’t mind taking chances. You’d rather take a big swing on an uncertain but potentially very lucrative outcome than play it safe and see a much smaller return. You’d rather have a 30% chance of making $50,000 than a 90% chance of making $5,000.

● Risk-averse – If you’re risk-averse, you don’t like uncertainty. You prefer outcomes that are certain, even if the result doesn't have as much potential for reward. You’d happily go for the $5,000, knowing it won’t cause you much stress at all.

Most people don’t fall squarely into one category or the other, so you can pick your portfolio based on which end of the spectrum you’re closer to. However, taking risks isn’t just about your personality—it’s about your financial situation and goals. Are you in a stable position? Can you afford to lose that much? Would you still make rent next month if this didn’t go your way?

You might be extremely risk-tolerant, but that mindset won’t always align with your reality.

Consider the Time Investment

Money isn’t the only thing you’re investing when you begin building your portfolio. You also need to think about how hands-on you want to be with your finances. You may want to “set it and forget it” or you might want to buy and sell shares on a weekly or even daily basis. It’s usually better to start with a less time-intensive approach and build up to more active investing.

Park Seo Joon and Kim Da Mi in Itaewon Class (2020).

Investing is Exciting!

We hope by now you’re feeling more confident about what to invest in. Remember, investing is extremely personal, so it’s always best to do what makes sense for you (regardless of what your overly-chatty coworker tells you about the market). It’s going to take time to start seeing a return on your investments, but when you do, it’ll all be worth it.

Happy investing!