investing for beginners

Entering your 20s means you'll quickly need to learn how to navigate the world of personal finances, much of which you probably didn't learn in college or high school courses.

Without any previous lessons on finances, it can be challenging to know where to start. Follow this guide as we outline the financial decisions you'll need to make in your 20s.

Setting a Budget

The first step to being a fiscally responsible young adult is setting a budget. Your budget will determine many future financial decisions, from where you can live to what splurges you can make. Look at the expenses you currently owe every month and your projected income to determine how much you should be spending on bills, daily expenses, etc.

Tackling Debt

Getting rid of your debt as early as possible is a critical step for newly independent 20-year-olds. However, some may not be able to get rid of debt as soon as they hope. Once again, look at your budget, then decide if you'd like to put more toward tackling debt now or pay your loans as they come.

Getting Coverage

While you may be able to hold onto your parents' insurance until 26, you'll have to choose your own plans sooner or later. From health insurance to renter's and car insurance, you shouldn't skip an opportunity to cover yourself in the case of an accident. Find a provider and plan you're comfortable with, and get your coverage as soon as possible.

Saving for a Rainy Day

Navigating how to save is another critical financial decision you'll have to make in your 20s. Living paycheck to paycheck is not a sustainable course of action. Even putting a small portion of your wages into a savings account can make a big difference—especially if an emergency you didn't prepare for occurs.

Starting To Invest

Investing is a scary topic for young adults, but it's a great way to build wealth. Starting to invest as a young adult will set you up for success on your long-term financial plan. However, be sure to conduct research before jumping into the market to decide when, where, and how much you'd like to invest.

Your 20s are an optimal time to learn and grow. One area of life you'll undoubtedly learn a lot about is managing finances. Use this guide to help you get started on the path to becoming a fiscally responsible adult.

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Sustainable living is more than just a buzzword these days; it has impacted our lives from the products we consume to the food we eat, helping us find balance in our lives, both physically and mentally.

So why not apply this concept to the way we invest our money as well? Enter—socially responsible investing.

Every dollar we spend gives us the ability to make a change in the world and as investors, we are at the forefront of creating a lasting impact. This can be done through Socially Responsible Investing (SRI) which gives us the ability to grow our money while investing in causes we care about.

Investing in clean energyThe Star

What is Socially Responsible Investing?

Socially Responsible Investing is when investors consider environmental, social and governance (ESG) factors when choosing where to put their money. This means choosing businesses that are ethically sound and align with the core values of the investor. SRI also means avoiding industries that have a negative impact on the environment, such as alcohol, tobacco, fast food or fossil fuel production.

The most important ESG factors vary by investor. Some may care most about the size of a company's carbon footprint while others might prioritize fair treatment of employees and ethical practices in the workplace. SRI has become incredibly popular in recent years and The Bank of America estimates that there will be a$20 million flow in this type of investing over the next two decades.

Different ways to invest in SRIs

Socially responsible investing is entirely dependent on what the investor wants to support through his/her investment strategy—be it climate change or workplace equality. Hence, there is no one size fits all approach to this type of investing. Here are a few ways to invest more intentionally:

Mutual Funds

Mutual funds are known to be safe bets for many investors, and they are popular among socially responsible investors as well. There are more than 200 socially responsible mutual funds on theUS SIF website for investors to choose from. You can find data on the financial performance of a stock along with information on how the company in question contributes towards a greater social impact.

SRI mutual funds focus on three main areas:

1. Environmental, Social and Governance funds—or ESG for short—are funds invested in industries that have adopted ethical practices. The company's material impact is taken into consideration along with its financial performance.

2. Impact funds—While ESG funds place equal importance on both impact and financial performance of a stock, Impact funds aim to put social impact first. These funds invest in companies that create societal change but may not offer the best financial return. They're good choices for investors who prioritize their social intentions over financial gain.

3. Faith funds—These funds invest in stocks of companies whose values are based on the Christian, Catholic or Islamic faith. Companies that don't fall under this category are excluded.

Alternative Investments

Socially Responsible Investing isn't just limited to mutual funds; other investment assets are getting into the SRI game as well. Alternative investment options for ethical investors include property funds and hedge funds which are said to be a $588 billion industry today. Investors who opt for this type of security have over 780 alternative investment funds to choose from.

What is socially responsible investing?Capital.com

Advantages of SRI funds

People who take the socially responsible investment approach usually tend to go all in. This means that their portfolios only include stocks of companies that are socially and ethically responsible. Here are the benefits of adopting such a strategy:

1. Stick to your values

All our actions and reactions are based on a core set of values that we follow. Socially responsible investing lets us apply this principle to our investment strategy as well. Investing intentionally through SRIs allows you to do more than just discuss social issues; you have the ability to use your money to take action for what you believe in.

2. Invest and let go

Most financial assets we invest in require micromanagement—either by us or a financial advisor. SRI funds, however, are designed to be low risk, allowing you (the investor) to adopt a hands-off approach. You can use your time to focus on riskier assets in your portfolio.

Disadvantages of SRI funds

While SRI funds may seem like a great addition to your portfolio, they do have drawbacks as well. These include:

1. Financial performance takes a backseat

Socially responsible investing allows you to invest in causes that you care about, but very often a strong focus on a company's ethical practices means that financial performance can take a backseat. Studies done on SRIs at different time periods showed thatthey underperformed in comparison to other stocks. Hence, when picking SRI stocks, it is important that you don't deviate from your financial goals.

2. A marketing gimmick

Although climate change and the carbon footprint are growing concerns, it is also important to remember that we live in a society where profits trump social ethics. Companies that claim to be ethical or socially responsible may be using corporate partnerships to improve their position in the market. In many cases, the illusion of social responsibility is simply a marketing gimmick to earn greater profits. The sad reality is that businesses who promote eco-friendly practices may be the perpetrators of an environmental scandal. A great example of this is when Volkswagen deliberately claimed they would design a system to reduce carbon emissions in order to gain an edge over their competitors; meanwhile, the company's production plant was actually poisoning the planet.

Is SRI the right fit for you?

Millennials and Gen Z are at the forefront of using socially responsible investing to create a lasting impact with their finances. This in no way means that SRIs are a fad that will eventually pass—in fact, they are here to stay. Between 2016 and 2018, the number of investments in SRIs grew by 38 percent. In the world of investing where making money has become the main goal, socially responsible investing allows you to earn an income while promoting change.

At the same time, this investment strategy may not be for everyone. In certain situations, investors should be willing to forgo extra income in favor of supporting a social cause. This trade-off is something that needs to be considered before investing with this approach. However, if you put in the time and effort, it is possible to find stocks that meet both your social and financial goals. Striking that perfect balance can help you feel secure, knowing that your finances are put towards a worthy cause!

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If you're savvy when it comes to apps but could use some direction in your investing game, combine the two and go from investing newbie to knowledgeable with tips you can tap into. Entering into the world of investing can be daunting, so invest your time before you invest your hard-earned dough. These 5 apps for investing beginners will lead you in the right direction. Invest with the best!

MoneyLion Plus

MoneyLion PlusVia crowdfundinsider.com

MoneyLionPlus is an app that is designed to help you borrow, save, reduce debt, invest, and earn. You'll learn the basics of landing a loan, keep up to date on your credit score as you monitor your credit history and charges, and have a neat place to store all your financial information securely. With personalized financial advice and a guided investing plan, you will begin to develop your investment portfolio and allocation. Step by step, you will become tuned in to how investing works and what works for you. And now's a great time to improve your investing know-how with MoneyLion Plus. According to Tech Crunch, "The latest version of the MoneyLion Plus app has an updated user interface to make things easier to navigate and provide faster access to the information. With its new UI, MoneyLion's home navigation now shows swipe-able cards to provide up-to-date information, recommendations and personalized advice." For $29 per month, this app will pay for itself… and then some.

Robinhood

RobinhoodVia thefinancegenie.com

Learn the ins and outs of the stock market for free with the aid of Robinhoodapp. The app leads you step by step as you build your portfolio from scratch. Invest in stocks, options, and ETFs (exchange-traded funds). Their mission? "To democratize America's financial system. Invest in stocks, ETFs, options, and cryptocurrencies commission-free." Make instant deposits with no wait time. You can boost your account by opting for Robinhood Gold. According to Business Insider, this account, "gives you access to extra buying power, larger instant deposits, and extended trading hours." Robinhood is easy-to-navigate helping you see market data clearly for making wise investment choices. As per The Finance Genie, "It's fast and streamlined so you can instantly verify your bank account and check on your investments or make trades with only a few taps." There is no account minimum to start, so what are you waiting for?

Stash

StashVia stashinvest.com

If you've got five bucks, you can begin your introduction to investing with Stash, anSEC registered investment adviser. Sign up is simple as you fill out your profile, and you will instantly gain access to 30+ investment options along with customized advice from your Stash Coach to help you set up your portfolio. All investments on the Stash app are carefully selected by their team. Everything is broken down and easy to digest, without unfamiliar terminology or confusion to trip you up. Their selection of ETFs is broken down by interest (activist, techie, globetrotter, trendsetter, etc.), so you can invest in companies that matter most to you. Stash's mission, "We believe everyone should have access to financial education, technology, and services that help them achieve their life goals," only furthers your faith in the Stash app and the knowledgeable team behind it.

Acorns

Acorns Via bankers-anonymous.com

Acorns is great for beginners or anyone who wants to start investing now, even if they don't have much money at the get-go. Just $1 per month will get you on your way. Acorns' micro-investing platform is a three-step entry process – connect your banking/credit card(s), make purchases as usual, and the app will start investing your spare change left over as they round up your purchases to the dollar. 7,000 stocks and bonds are available for investing, to "improve your return while reducing risk." You'll create a portfolio designed in part by a Nobel Prize-winning economist to manage your investments in an organized and professional manner. With the app comes Grow Magazine, so you can continue to learn more about investing as you delve deeper into the financial world. CNBC calls Acorn, "The new millennial investing strategy." With investors including PayPal and Ashton Kutcher, Acorn is on to something.

Wealthfront

Wealthfront Via blogwealthfront.com

Connect your financial accounts to the Wealthfront app and fill out a questionnaire, and let their expert software analyze your info to help you make the most of your finances by investing intelligently into one of their 20 portfolios. They will design a personalized plan to help you achieve your investing goals with a diversified plan from the ground up. With just a .25% annual advisory fee for accounts with a $10,000+ balance (otherwise free), you will spend a little to gain a lot. According to NerdWallet, "Wealthfront offers the kind of holistic financial advice and automated investment management that appeals to new and experienced investors alike." With access to U.S. and foreign stocks, bonds, real estate, securities, etc., Wealthfront has a mix of options to help you invest strategically and successfully.

Invest your money the modern way with app-telligence!