We asked our community what finance question they had but were too intimidated to ask. You all came through with good ones! So BuzzFeed talked to money expert and founder of Her First 100K Tori Dunlap, who's committed to helping others manage their money. Here's her great financial advice!
1. "How do you even start investing in a way that will end positively? My dad tried years ago and lost a ton of money. Who do I talk to — where do I start?"—srkallas7
Tori Dunlap: "If I had a nickel for every time someone shared their fear of investing...well, I wouldn’t need to invest — let’s just say that. And after 2008, I completely understand that fear. But the fear is often unwarranted if you’re investing with time in mind. When you mention that your dad lost a lot of money, it makes me think he might have been participating in the riskier side of investing — like individual stocks or (even riskier) day trading or short-term investing, which by the very nature of the word, is not investing — it’s gambling. The word invest means 'to devote time and energy to something,' so when I talk about investing I’m not talking about quick cash — I’m talking about a long game plan.
When you invest through an account like an IRA, take advantage of your company’s 401(k) program, and invest in something like low-cost index funds (please do your own research!), your money is spread out across the stock market over a long period of time. So when the market or even individual stock crashes happen, you have time on your side for things to flip around again. Play the long game, not the fast cash game."
2. "I need help figuring out what I should put monthly into my Roth IRA. My tax app told me I put in too much a month. Help!" —clairer455768e69
Tori Dunlap: "An important thing to note about your Roth IRA is that it has a maximum contribution limit: $6,000/year or $7,000/year if you are 50+ years old. It’s possible you’ve contributed too much already, or you may be on pace to hit that sooner than the year. I’d ask for additional clarification!"
3. "To make money and be able to use it after a short period of time, would I have to become a trader, or can you make a profit just investing slow and steady?" —colorfashionfun
Tori Dunlap: "Day trading is gambling, straight up. Sure, you might make some fast cash, but you can absolutely lose it. If you’re looking to save for something in the next three to five years, I suggest looking into a high-yield savings account and focusing on putting your extra cash there. You’ll see a higher interest rate there than if it sits in your checking account. When considering long-term investments, just remember that you won’t be able to pull earlier than retirement from a Roth IRA or 401(k) without a hefty penalty."
4. "I don’t have a steady job. To earn money, I take surveys and pick up gigs wherever I can. I want to start investing either in stocks or an IRA, so I have money for retirement. Am I able to do so?" —sandrab4fbdf3282
Tori Dunlap: "1,000% yes. Absolutely. I recommend having a three-month emergency fund (think all of the bills you HAVE to pay in a month to survive and multiply it by three) first if you don’t already have that in place. Many investing platforms will let you invest for as little as $50 a month, and because time is just as important (and sometimes more) as what you can contribute, the sooner you start the better. I also recommend paying off any high-interest debt (think credit cards) before you start investing."
5. "How the heck do I pick ETF investments? There are too many numbers and groups and options." —mikaylabeuch
Tori Dunlap: "So a stock is ownership in a company, like having a tiny sliver of a company’s pie. ETFs are simply groups of these stocks: for example, instead of just owning Tesla, you could own Tesla, Johnson and Johnson, Google, Apple, Shopify, etc.
A few things to look at when you’re choosing your investments: its performance over time, its expense ratio (aka what are the fees), and its holding (aka what companies are part of the ETF). Stay tuned for this summer, when I’m building an education platform for investing (sign up for the waitlist here!)"
6. "What type of accounts/investments are best for saving for a house down-payment?" —helgageraldine
Tori Dunlap: "High-yield savings accounts! They’re basically souped-up savings accounts that offer a higher interest rate than checking or 'normal' savings accounts you might have at your bank. A good rule of thumb with HYSAs is that you should consider them if you’re planning to use the money within three to five years."
7. "How much do you need to start meaningfully investing? And what’s the best way to do it? I’ve thought about doing something small with an app like Robinhood. Would you agree that’s the best way to start, or is there something more savvy?" —adrianao4caf40365
Tori Dunlap: "Honestly, not much. You can start with as little as a few hundred dollars. Because time is such an important factor in investing, starting where you are with a small amount is better than not starting at all. Just make sure you’ve paid off high-interest debt and have a three-month emergency fund in place.
However, I do NOT recommend Robinhood! They don’t offer tax-advantaged retirement accounts, which is what I recommend. Some account options I guide people to are 401(k) (if your employer offers it), Roth or Traditional IRA, and, if you’re self-employed, an SEP IRA or a Solo 401(k). I’d rather you take your hard-earned cash and invest it in an IRA for retirement or save it in an HYSA (high-yield savings account) if you need it in the next three to five years."
8. "How do I find a high-yield savings account? What are some ideal things to look for, and what are red flags to avoid? And what do you think should become the new normal for kids in terms of savings — and how to talk to kids about preparing for the future? How can a parent be a teammate here instead of coming off like the creepy old bankers in Mary Poppins?" —saraha93
Tori Dunlap: "As long as you’re working with a reputable, FDIC-insured financial institution, you’re good. Some other things to keep in mind are if the bank has monthly fees, or if you have to maintain a certain balance or need to deposit a certain amount per month. This all depends on your financial situation!
I love this question. Kids are so much smarter than we give them credit for. I think the worst thing we can do is attempt to shelter them from money conversations. Start early. When they get that first allowance, help them create a budget that includes spending, saving, investing, and giving. Show them that money is a tool for their interests. Say, 'If you save X, then you can buy this cool toy/ticket to see your favorite band/etc.' That way, when they do start earning 'adult' income, they’ll have a system in place and be more likely to follow it. Talk to your kids about investing, and even help them open their first IRA at 18! $50 a month at age 18 can net them some serious cash later in life."
9. "Should I be saving for a deposit for a house or investing in a 401(k)?" —virginiascarletts
Tori Dunlap: "If you have your employer matching your 401(k), MAX IT OUT. If you don’t, you’re leaving free money on the table. As far as buying a home, it will be worth a longer wait to save less over time and take advantage of the 401(k) match. Make sure the money is in a high-yield savings account, and throw whatever extra you can at it after you’ve maxed your 401(k) contributions."
10. "One of the biggest things I've never been able to answer is how much money should I have in X account? Like how much should I actually have in my checking account? Savings account?" —tjl448651be5
Tori Dunlap: "This is absolutely a personal preference, but the math is the same regardless. Have at least three months of expenses (an emergency fund) in an HYSA. After that, it all depends on what your investment goals are. Do you want to buy a home? Save for a child’s college? As for checking accounts, I always like a small padding to make sure I don’t ever accidentally overdraft, which could be as simple as never letting your balance fall under a predetermined amount of dollars."
11. "I’m confused about retirement. Should I be putting money into a separate fund other than what my employer gives? Also, I hear people talking a lot about losing retirement when they switch districts (I’m a teacher), and I’m wondering if I should have my retirement elsewhere, because the money I’ve been putting away could disappear if I get a new job. So unclear." —j422da9ff5
Tori Dunlap: "The nice thing about investing is that you can have multiple investment accounts. If you have a 401(k) with your employer, you can also contribute to a Roth IRA. If your employer is matching your 401(k) contributions, that's free money on the table, and you should be doing everything possible to max that out first."
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Note: Some submissions have been edited for length/clarity.