Investing

Definition

A way to set money aside and have that money grow for the future

• First of all, why?
  1. Achieve greater wealth in the future
  2. Achieve more income than the current risk-free rate
  3. Outpace inflation
• Decide how much risk/comfort you want
• Sources
  • https://www.investopedia.com/articles/basics/11/3-s-simple-investing.asp

Goals

• Investing: Start small, but start now!
• $2000canturnintoalmost$100,000 after 40 years
• Investing in stocks can help you pay for your biggest goals.

Ways to Invest

• Retirement account
  • 401(k) - employee
  • IRA - individual
    • Roth IRA vs Traditional IRA (difference - when you pay taxes)
      • Roth IRA - you pay taxes now on the money you put in and then never again
      • Traditional IRA - you skip/deduct from taxes now and pay taxes when you pull money out
    • 📌As a student with likely lower income I should prioritize a Roth IRA over a Traditional IRA coz my tax bracket is most definitely going to go up
  • For 2026, the contribution limit for a 401(k) is $24,500andforanIRAis$7,500.
• 529 savings plans
  • Tax benefits for those investing for higher education expenses
  • 📌I can open a 529 for myself
    • I am legally allowed to be both the account owner and the beneficiary (i can start now for grad school or future training)
    • If you invest $1,000anditgrowsto$1,500, that $500profitisusuallytaxedbytheUSgovernment(FederalCapitalGainsTax).Insidea529,that$500 profit is never taxed as long as you spend it on tuition, books, or housing.
• Discount brokers (online, DIY)
  • DIY platforms like fidelity, Schwab, or Robinhood that allows you to invest by opening brokerage accounts
  • Brokerage accounts
    • the name of the account where you hold stocks (like a “Checking Account” holds cash)
  • Most major US brokerages (Fidelity, Schwab, Robinhood, Webull) now charge $0 commission for stock and ETF trades. You generally only pay fees for options contracts or if you use a full-service human broker
• Full service broker (human)
  • You sit down with them, they manage your money, and they tell you what to buy.
  • They are expensive. They usually charge a percentage of your total money (e.g., 1% of everything you have, every year) or high commissions