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  • Writer's pictureOnlyFunds Investment Adviser Staff

4 Things I Wish I Had Known About Investing Earlier

Updated: Jul 10, 2022

Learning about investing may be daunting. Take these 4 easy tips to make it a little easier, and get started early.

1. Its not about timing the market; its about time in the market.

Trying to "time the market" by entering and exiting investments when you think the market is about to move is really hard. Even professional traders and hedge funds only win about 51% of their timing bets. They end up making money by having lots and lots of those bets, but with your personal finances, its a pretty big risk. You stand a better chance of growing your wealth over time by leaving your money invested for a long period of time.

Why? The market may move up and down over time, but over longer periods of time, a well-diversified portfolio will average out to a good return, without you having to worry about when to invest. The good news is: we take care of the timing for you. Open an account in less than 5 minutes and start getting those returns today.

2. "Dollar Cost Averaging" is your friend.

What is Dollar Cost Averaging? It's the pretty simple concept of adding to your investments at the same amount over time. That means instead of trying to time the market, you contribute, for example, $100 to an investment account every month. When the market is up: $100. When the market is down: $100. There's mathematical proof that dollar cost averaging ends up being more beneficial than trying to put in one-lump sum and make it grow.

It also builds the good habit of forcing you to save over time.

3. Build good saving habits - or automate them!

At OnlyFunds, we're all about taking the guesswork out of how to manage your investments and your savings. One of the best tools to help you save the right amount is building the habit of putting away some money each month into investments that will grow over time. OnlyFunds' Client Portal makes this even easier: you can set up recurring deposits from a linked bank account. In addition to getting the benefits of dollar cost averaging, you never have to worry about whether you're storing up for your goals - whether that's retirement, a major purchase, or education.

And we know first hand, if we have money sitting around not doing anything, we are going to spend it... mostly on things we don't need. (The staff here is human too!) With good savings habits or automated recurring deposits, it takes away the temptation. You can rest easy knowing that the money you worked really hard for is working hard for you, more and more every month.

4. Avoid taxes where you can. It adds up.

OnlyFunds gives you two great ways to avoid taxes, which can add up a lot over time. The earlier you start, the more you can save.

The first way is to open an IRA account, which you can do at any time in the OnlyFunds Client Portal, or when you open your account. In an IRA, you make contributions with money you may be able to deduct on your tax return, and any earnings can potentially grow tax-deferred until you withdraw them in retirement. That means you can avoid paying taxes on them now, while you're making money, and pay taxes on them when you're retired, and in a lower tax bracket. You should try to contribute the maximum amount to your IRA each year to get the most out of these savings. OnlyFunds monitor your investments and make adjustments as needed, especially as retirement nears and your goals change.

The second way is Tax-Loss Harvesting (TLH). If you turn this on in your OnlyFunds Client Portal, the algorithms will automatically buy and sell similar investments for you to reduce the amount of taxes you pay at the end of the year. It's a little complicated, but the algorithm takes advantage of an IRS loophole to capture losses in investments you have to reduce your tax bill. Its just one of the ways OnlyFunds is looking out for you when you invest.


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