The world of investing can be vast and confusing, especially to a first-timer. There are so many decisions to make, and each one carries with it the risk of loss, or the promise of growth for your money. No worries, though; SRI Federal Credit Union can help! Here’s how to start investing in five easy steps.

Step 1: Define your tolerance for risk 

If you’re investing, you’ll need to be prepared for the reality of potential losses. There is no such thing as a “sure thing.” But how much losing can you take?

Determining your risk tolerance is an important way to ensure you’re completely comfortable with your investment path. Your risk tolerance will likely vary according to your age and the time horizon you’re working toward; your risk capital, or the amount of money you can afford to lose; and your investment objectives, or what you hope to gain through your investments.

2. Define your investment goals

Why are you investing this money? Do you hope to save enough money for a down payment? Are you trying to fund your retirement? Do you plan to use this money to pay for your child’s college education? Or, are you looking for a way to grow your money without any real plans for its ultimate use?

Identifying your investment goals will help you choose your investment vehicles and the amount of money you’re comfortable investing.

3. Determine your investing style

Next, you’ll need to find an investing style that suits your personality and investing goals. Here are your basic choices:

• Active management–personally managing your investments. This can be a great choice for an investor who is confident in their knowledge of the market and can make decisions they won’t regret. It’s generally not a choice that’s recommended to new investors.
• Broker/financial advisor–allowing an outsider to manage your investments. There are several kinds of brokers you can choose: Full-service brokers will charge a higher fee, but they will also manage every aspect of your investments, including estate planning, retirement planning, financial advice and more. Discount brokers will have lower fees, but offer fewer services. A financial advisor will make investment decisions, monitor your portfolio and make changes as deemed necessary according to your indicated risk tolerance.
• Robo-advisor–an automated option that typically costs less than a traditional broker and works with your goals, risk tolerance level and other personal details.

4. Choose your investment account

You’re ready to choose your investments! Here are some options to choose from:

• Bonds–a loan to a company or government entity that agrees to pay you back in a specified amount of years. You’ll receive modest dividends until the bond matures. Bonds are low-risk, but tend to offer lower long-term returns.
• Exchange-traded funds (ETFs)–individual investments that are bundled together and traded throughout the day, like a stock. Share prices are relatively low, making ETFs a great choice for small budgets.
• Mutual funds–professionally managed pools of investor funds that focus their investments in different markets. Mutual funds are inherently diversified and can be a good choice for beginner investors.
• Stocks–a single share or a few shares in a specific company. If you’ll be putting all your eggs in one basket, be sure to research your chosen company carefully.

5. Learn to diversify and reduce risk

Once you’ve started investing, you’ll need to monitor and adjust your portfolio on a regular basis for optimal performance. Most importantly, you’ll want to make sure your portfolio is diversified, or that your funds are divided across different investments and classes. Diversifying helps reduce your risk of loss by ensuring that one poorly performing investment won’t bring down your entire portfolio.

Getting your feet wet in the world of investing can be super-exciting, but daunting. Follow the steps outlined here to get started.

Let’s explore the best ways to build and maintain an excellent credit score.

Have several active credit cards

Many consumers mistakenly believe the path toward great credit is through swearing off all credit cards. However, building and preserving a healthy credit score requires owning a card or two and keeping them active. If you’re just starting out, consider signing up for a beginner’s card, which generally features easy eligibility requirements and very little available credit. Otherwise, be sure you have a minimum of three open cards and that you use them on a regular basis.

To keep your cards active without having an open balance, you can pay one fixed monthly bill, such as a subscription or monthly membership fee, with each of your credit cards. Set up an automatic monthly payment for the bill by linking your credit card, and then set up an automatic monthly payment for the credit card, too, by linking your checking account to the card. Choose to have the money transferred before the bill is actually due. This way, your cards will be open and active and you’ll never have a late payment, which would negatively impact your credit score. Several months of using your cards responsibly will generally help move your credit score upward.

Work on paying down debt

If you’ve landed deep in debt and can’t find a way out, now’s the time to work on kicking that debt for good.

First, choose your debt-crushing method: The snowball method works by putting all available funds toward paying off the smallest amount of debt first, and then the next smallest, until all debts are paid off. The avalanche method works the same way, but pays off the debt with the highest interest rate first, and then the next highest until all debts are paid off. With the snowball method, you’ll see results quicker but may ultimately pay more in overall interest. Choose the method that works best with your personality, goals, and lifestyle.

Next, list your debts. If you’re going with the snowball method, list in order from lowest amount to largest. If you’ve chosen to use the avalanche method, list your debts in descending order of interest rate.

You’re now ready to pay down those debts! Review your monthly budget to find a way you can trim your expenses, or look for a side hustle, and use the extra cash to maximize your payments toward the debt you’re working on first. Keep at it until you’re debt-free.

It may take a while to crush a mountain of debt, but showing the credit bureaus that you’re on track to pay off that debt can do wonders for your score.

Pay your bills on time

Paying credit card bills when, or before, they’re due is a major factor in determining your score. Carrying an outstanding balance, and/or owing lots of interest, shows that you are not timely with your bills and can’t be counted on to repay loans responsibly. As mentioned, you can set up automatic monthly payments for your bills so you’re never late. Just make sure you keep the account you are paying from well-funded to cover your payments as they come out.

Bring down your credit utilization ratio

Another crucial factor contributing to your score is your credit utilization ratio. This refers to the amount of available credit you have and use. It’s best to keep your utilization under 30%, or even 10% if you can. To that end, make sure you’re using just a bit of your available credit each month. In addition, consider accepting offers for increased credit – as long as you know you won’t rack up huge bills by having all that additional credit.

Keeping an excellent credit score is a key factor in financial wellness. Use the tips outlined here to build and maintain a great score.

Sticking to a budget during times of high inflation is challenging – but not impossible. Here are five ways to budget while in times of inflation.

1. Plan your grocery purchases

Groceries can take a huge bite out of a monthly budget. Fortunately, there are ways to trim your grocery bill, even when prices are soaring.

First, shop your pantry and fridge before hitting the store. You may not remember exactly what you have at home, and doing a quick scan of your food items can help you stick to purchasing only what you need.

Next, plan your week’s dinner menu before shopping so you can pick up exactly what you need for the week in just one go. The fewer trips you make to the grocery, the less you’ll spend on impulse buys. Also, when you have the ingredients you need and plans in place for dinner each night of the week, you’ll be less likely to make a last-minute decision to indulge in takeout or fast food.

Consider joining a club store at this time as well. You’ll need to spring for a membership, but you’ll enjoy steep savings on groceries and other products. Just be careful to only buy what you need, no matter how cheap an item might be.

Finally, don’t forget to shop sales and to couponize. Use apps like Reebee, Checkout 51, Flipp, and Grocery IQ to stay in the know of what’s on sale in each store, and to download coupons for even bigger savings.

2. Consider an energy audit

With winter approaching and the cost of energy sources still climbing, this can be a good time to have an energy audit performed on your home. An audit will help identify energy drains around your home, such as air leaks near your windows and doors, so you can fix them to make your home more energy-efficient. You can also take additional measures toward saving on energy costs, such as switching all lightbulbs to LED bulbs, unplugging electronics when not in use, and setting your thermostat a little lower during winter, and a bit higher in the summer.

3. Choose your indulgence

Everyone needs to treat themselves to something special every now and then, but with costs rising on restaurant meals, movie tickets, and clothing, something’s gotta give. Take a closer look at your just-for-me purchases of the last few months, and try to narrow them down to just one or two treats. You can swap them with an enjoyable activity that doesn’t cost much, such as a hike or bike ride, or cut them out completely.

Alternatively, you can find ways to trim the cost of your indulgences. For example, if you love dining out but restaurant meals are destroying your budget, you can decide to eat out but skip the desserts and wines, or opt for a midday meal so you can take advantage of lunchtime specials.

4. Switch your auto insurance plan

If you’ve had your auto insurance policy for a while and you’ve maintained a good driving record during that time, there’s a good chance you can save a bundle by switching to a new insurance plan and/or provider. Reach out to a representative at your current insurer to discuss your options. Ask about raising your deductible in exchange for a lower premium, reducing overall coverage or negotiating for a safe driving discount. After obtaining a quote, call several other providers to get competing quotes. You can choose to go with your lowest offer, or call back your present provider and ask them to match it for your continued business.

5. Pad your income

As always, when income doesn’t meet expenses, you have the choice of trimming expenses or boosting your income – or you can do both! In addition to following the cost-cutting tips outlined here, you can also look for ways to increase your income.

If your paycheck is suddenly not enough to support your lifestyle, consider asking for a raise. Your workplace may have already given you a cost-of-living raise to reflect rising inflation last year, but this may prove to be insufficient as costs have continued to rise. Don’t be afraid to ask for another raise at this time.

In addition, you can look for other ways to pad your monthly income. Find a side hustle, like driving for a ride-share company or consulting for hire, which you can do at your leisure on weekends. Ask your workplace about taking on additional projects on an as-needed basis for additional pay. Open a small service business doing something you love and excel at. Every extra dollar earned counts!

Times are hard for the average American consumer, but with careful planning, you can ride out the record-high inflation rates and keep your budget intact. Use the tips shared here to get started.