Brandon Krieg — the CEO of micro-investing and savings app Stash, which was valued at an estimated $1.4 billion last year — is a big believer in thinking long-term and good investing habits. “The vast majority of Americans really need to be thinking about how to build an emergency fund, how to build a long-term portfolio for retirement,” he says. “The pandemic has shown that people need to build different safety nets and that nothing in life is certain.” We chatted with Krieg about what beginning investors need to know now.
Think about habits vs. “getting rich”
Instead of thinking that you need a lot of money to throw into the market all at once, Kreig recommends the practice of putting money, no matter how small the amount, into the market over time on regular intervals — a practice called dollar-cost averaging, which he notes is “a time-tested way to grow your money.”
“We all have good and bad money habits, that’s being human,” he said. “Dollar-cost averaging is still really important because it reinforces a good habit. You’re putting away money on a regular basis to save and invest.”
Developing saving and investing habits, such as putting money into an IRA every week, is a smarter way to think about making money in the market instead of how to get rich now.
“[Almost] no one gets rich right away, that’s a myth,” he says. “Thinking that way can lead to a really sad ending. The negative side effect of that is people lose whatever confidence they have, they lose money and they don’t go back and do it again.”
You can’t beat the market
With YouTubers pitching tips on how to make money trading penny stocks and crypto enthusiasts saying you should “buy the dip” now to make big bucks, it can seem like the purpose of investing is to get rich quick. “People want to ‘beat the market’ but honestly, I’ve been doing this for 20 years, I’ve never seen it done,” said Krieg. “No one can predict what the market’s going to do right now or five minutes or five years from now.”
It’s advice Warren Buffett himself gives to novice investors. In an interview with Yahoo Finance, the Oracle of Omaha said, “Any attempts to pick the times to buy or sell, I think, are a mistake for 99% of the population. And I think that even attempts to pick individual securities [are] a mistake for people.”
It’s okay to learn as you go
It’s easy to believe that you have to be …….