Financial Literacy Month: Introduction to Investing

This month, we’re bringing you bite-sized servings of financial literacy. Each week, we’ll introduce you to a core concept and map out a fun and easy daily action item. This is our fifth and final week in the series.

Once you have tackled budgeting, saving, debt, and retirement, you are ready to invest! We get a lot of questions about investing because it often feels mysterious and out of reach. The good news is that you only need to understand a few key concepts to get started.

What is investing?

Investing is putting your money into something that you expect to increase in value, thereby creating a profit and earning you more money. At TFG, we think of investing as giving your money a workout.

Why is it important?

As we have experienced recently, inflation erodes our purchasing power, so if we only keep money in our bank account, it will decline in value over time. That means we need to save more in order to afford the same things. Over the long-term, we expect investing to provide returns that exceed inflation and make it easier to save up for big purchases and retirement. 

What keeps us from investing?

There are a lot of reasons! One of the main ones is fear: we are afraid of losing money. Investing inherently involves risk, but learning how to manage risk can ease this fear. Another is confusion: we aren’t familiar with investing terminology or don’t know what to invest in. This is where financial literacy comes into play! The final major reason is that we just don’t have the money to invest because we haven’t focused on saving. If this is the case for you, take the time to work on budgeting, saving, and paying off high-interest debt first. 

Are you ready to start investing?

As we alluded to already, you should have a solid financial foundation before investing. This means having at least three months of emergency savings, not having any high-interest debt, and being on track with saving for retirement. Investing without a financial foundation is like trying to build a mansion on sand — no matter how good it looks, it will eventually collapse. If you do have the fundamentals in place, the next thing to determine before investing is when you plan to use the money. You should not invest any money that you need in less than three years, but if your timeline is longer than that, investing may be a better option than saving in cash.

To continue learning more about investing, here is your financial literacy “homework” for the week:

Saturday: You read this blog post — you’re done for the day!

Sunday: If you’ve got your financial foundation in place, investing might be the next right step depending on your goals. Listen to Kadri and Kylie Gymsplain Investing.

Monday: What actually are stocks and bonds? Why does compounding interest matter? Read Investing 101 (Part One!).

Tuesday: Use this investing cheat sheet to choose which type of brokerage account is best for you

Wednesday: Once you’re ready to invest, you need to decide where you’d like to open an account. Read Investing 101 (Part Two!).

Thursday: Ever thought of investing in crypto? Listen to Cryptocurrency Decrypted with Hector and Garrett

Friday: Take this quiz to see what you learned this week.

Financial Literacy Month: Introduction to Investing is written by Kylie Lipinski, A Certified Financial Trainer for

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