Investing in a Nutshell for Non-Investors 

A few simple steps for the best complete way to plan for your financial future while spending an absolute minimum of time.

  1. Focus first on creating a career that will make you wildly successful by your personal measure. Your greatest financial success will come through your career – but the steps below will ensure that you maximize your investments.
  2. Plan to tighten your purse strings, particularly early on, to put aside as much as you possibly can, wherever you happen to be in life right now. Spend time on your expense budget, and particularly focus on the large things like rent and transportation where a single change will have a lasting impact. For an inspiring story read this – understand that this couple really scrimped for 15 years but it paid off. And be sure to look at their website!
  3. Note: Do not scrape every penny into passive investing at a cost to your career opportunities. You can and should certainly invest in your education, in a good suit, in a Dale Carnegie speaking course.
  4. Open an account with an established brokerage like TD Ameritrade, Schwab, etc.
  5. Put as much as possible into retirement savings. You want to maximize retirement savings because they give you tax benefits. (Note that these numbers are for people under 50; they are a little higher if over 50):
    1. Put $6,000 into a Roth IRA each year.
    2. Put as much as you can into your company 401(k) or other retirement plan, and take full advantage if they offer matching funds.
  6. After planning for the above, put as much as possible into a regular investing account with the same brokerage . You may have regular paycheck deductions, or plan to transfer a set amount each month, or simply put money in when you can.
  7. Depending upon where you are in life and whether you need to keep a portion of your money essentially risk-free, invest as follows:
    1. Put most or all into one or more Exchange-Traded Funds (ETFs) from this list (skip any bond ETFs, and do a little research into any you choose):
    2. Put the remaining amount into Certificates of Deposit (CDs) or Treasury Bills, either through your brokerage or your bank or credit union. Understand that they will generate very little return on investment, but will have essentially no risk. As you grow older it makes sense to put more and more into safer assets, but when you are younger you want to take the reasonable risk of putting pretty much everything into ETFs.
  8. #7 is your non-retirement money. That means that if you need to use it for another purpose, whether other investment (like a house) or for your current needs, you can take it out at any time. However, be aware that capital gains tax is 15% (assuming you aren’t making well over $400k), but unless you have held the investment for more than a year you will have to pay at your income tax rate which is likely 22-35%. So don’t sell anything you have held for less than a year unless you need to.
  9. Set up a plan to check on your investments regularly. Make sure you are comfortable with the website of your brokerage and the information available there. Check your balances weekly, and have some system so you notice how your investments have changed. This can take as little as 2 minutes, to log in, confirm your balances, and log out. Download at least the December statement. And plan to spend at least a few minutes once a year to review where you are financially, your personal and financial goals, and whether you should change anything about your investment plan. Perhaps you will want to increase or decrease the amount you are setting aside, perhaps you will want to rebalance your investments between ETFs and ‘cash investments’ (CDs and T-Bills), perhaps you will want to try other ETFs. But set aside at least a few minutes, at least once a year.
  10. Celebrate! It may have taken a few hours to set up the above plan, but now that you have done it all you need to do is follow it, make the regular contributions, and keep an eye on your investments. You have done what very few people have done: planned for your financial future. Now, with minimal attention to your investments, you can focus on the things that are truly important to you – your career, your family, and your lifestyle.
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