Whenever financial articles talk about investing, it’s typically discussed as this thing everyone already knows how to do.

Not true!!

Yet when you turn to the trusty internet, a lot of articles about investing go from “hi, how are you,” to talking about asset allocation pools and dividend returns three sentences later.

Woah whoa, we just met. Can we slow down?

NICE TO MEET YA

Introductions first. Investing = locking your money down in something other than cash money where the VALUE IS EXPECTED TO INCREASE. Is a house an investment? In most cases, yep. Savings bond? Absolutely. Your latest amazing shoe purchase? Sorry, but probably not.

Time for an IRL example. Fiona has an extra $1,000 sitting in her bank account. She doesn’t need it for rent, bills, emergency savings, or a new MacBook, AND she’s already maxing out her 401(k) and Roth IRA accounts. Snaps for Fiona. Instead of looking up airfare prices to Bali or Hong Kong, she decides to invest it.

#iseeyoufiona

She opens a trading account. Here, like Amazon, she can buy things. But instead of it being delivered to her house, her purchases sit digitally inside her account.

What kinds of things can she buy? Like Amazon, there are a lot of possibilities. She can buy stocks, bonds, ETFs, shares in a mutual fund, and other cool stuff.

Those things aren’t fun, Fiona’s friend Trish says. Trish wanted to go to Bali with Fiona.

But if in two months, instead of $1,000, Fiona has $1,050, isn’t that fun? Or if in two years she has $1,600, isn’t that even more fun? Money for doing nothing?

I guess, Trish says.

Alright, Trish, you’re being a little difficult, but it’s okay. I think you’re getting the point. Anyway, it’s Fiona’s money.

RECAP

Investing = buying things that are expected to increase in value

Think stocks, bonds, real estate, mutual funds, ETFs.

What do you need to start investing? A 401(k), IRA, or brokerage account.