Frequently Asked Questions - The Chic Capitalist

I’ve taken the liberty of pulling together a list of frequently asked questions that I believe may be helpful to you, my readers, based on feedback I’ve received. If you’re unable to find an answer to your question, please feel free to contact The Chic Capitalist directly through our Contact Page.

How Much of My Income Should I Invest? And How Much Can I Spend?

As you might imagine, these are incredibly difficult questions to answer. And the response will vary depending on the individual and the situation. At it’s core, investing is a tool for building long-term wealth. With that understanding in mind, I believe everyone should be investing something on a consistent basis. And of course investing isn’t limited only to stocks, but to other financial vehicles, real estate, antique collectibles, artwork, etc.

Budgeting is a technique I use to ensure I’m investing and saving an adequate amount each month. Start by calculating your income and then calculate how much you spend on expenses. How much money remains after you pay your expenses? Can you reduce your spending? How about increasing your income? After you establish a baseline, monitor your actual saving and spending trends to determine whether you’re achieving your goals or whether these goals were unrealistic to begin with. If you’re able to set aside money every month, that’s great! Put those funds to use by investing them.

What Stocks Should I Invest In?

If only I had a crystal ball answering this question would be a whole heck of a lot easier. Unfortunately, I don’t, so I’m left following the principles of my investment philosophy when picking stocks. I recommend performing your own research and developing a strategy that works for you. Are you looking for high yielding dividend stocks or stable large-cap blue chips or growth stocks or something else completely? Moreover, do you want to invest in stocks or would you prefer to invest in less risky investment vehicles like bonds, CDs, or even a high-yield savings account? Once you’ve narrowed down your specific investment goals, you should ideally have a better idea of what stocks align with your objectives.

Additionally, I recommend investing in brands you’re familiar with and that you believe in with the caveat that you perform an independent valuation assessment. For instance, say you’re window shopping and see the cutest graphic tee in a store window. You’re immediately smitten. You just have to have it! You walk into the store, flip over the price tag, and BAM! It’s a designer tee and costs a whopping $500. Would you still purchase it? Perhaps. But maybe not! You have to think similarly when investing in stocks. You may adore a company and believe in it’s products and/or services, but based on it’s current price tag (i.e. it’s valuation), it might not be a worthwhile purchase.

How Do I Know if a Stock is a Good Investment?

One of the best ways to ensure you’re making a good investment is by educating yourself. What does the company do? Are they profitable or expected to become profitable in the near future? Do they have propriety technology or other assets that gives them a strategic advantage over competitors? Do you trust that the board of directors and executives are competent and making the right decisions? How is the market valuing the company? These are all questions you might want answers to before purchasing a company’s stock.

In my opinion, the best way to educate yourself on a company is by reading and analyzing a company’s annual and quarterly reports, known as 10Qs and 10Ks, respectively. I recommend using the SEC’s Edgar Search Tool to quickly and easily pull these reports. Also, check out my posts detailing How to Read Financial Statements! Biased I may be, I can’t stress how important it is to have at least a basic understanding of a company’s financials prior to investing.

When Should I Start Investing and How?

There’s never been a better time to start investing! Today, there are many reputable brokerage firms that will allow you to create an account and start trading for free. Of course, depending on how much support you need, the broker may charge a fee. Nerdwallet is a great resource for comparing online brokers when you’re first getting started. Personally, I use Fidelity as my broker. It’s great platform and it’s super easy to use. Once you select your broker, you simply need to create a brokerage account and transfer funds before you can start placing trade orders.

In terms of when to start investing, my answer will always be the same: as soon as possible! The longer you’re invested, the more money you’ll earn through interest, dividends, and ideally, capital gains. And the more you can supplement your income! Isn’t that a beautiful thought? Of course, you’d need to have fairly substantial investment balances and be earning a passive income to supplement your income completely.

How Much Money Do I Need to Start Investing?

There is no set minimum amount required to open a brokerage account and start investing. Have $5? How about $1? That’s right – you can invest it! And it’s now easier than ever to start investing thanks to the advent of fractional shares. Fractional shares allow investors to invest in (you guessed it!) a fraction of a share if he or she chooses not to invest in a full share. Although it may seem like a trivial distinction, I promise you, it’s not. It provides you, as an investor, the ability to purchase a stake in a company even you can’t afford to purchase a full share of stock.

Many online brokerage firms now provide clients the opportunity to invest in fractional shares, but it’s important to do your research before selecting a brokerage firm if this is a feature you care about.

How Do You Choose Which Products to Showcase on This Blog?

Products featured on this blog are sold by brands that I purchase from and LOVE. If you have questions on products I feature, please feel free to reach out to me directly through the Contact Page.