So last week we talked a lot about the difference between ETFs and stocks, and I announced that I would be sharing my journey of becoming a beginner investor with you.

The How

As we discussed, I am using Stash to facilitate this journey. Stash is awesome because it’s tailored to help beginner investors like me become investors. Creating your Stash profile is super easy. I did it online and then downloaded the app. To create your account you need to enter in your email and answer a few questions about your background, as well as identify your risk-profile.

I am going to be a beginner investor so I set my risk profile at low. After creating an account, download the app. You will use the app to start investing and build your investment portfolio – but you don’t do the investing part on your computer. Once you have the app you can select which category in which you would like to invest. The recommended category for me was the Conservative Mix, based on my risk profile. Scrolling through the choices, the “Do The Right Thing” ETF was the most interesting to me. This ETF also matches my risk portfolio – which is important to me. As a beginner investor I want to learn how to manage my investments slowly and thoughtfully.

The Why

The “Do the Right Thing” ETF is a conglomerate of socially responsible businesses that work to improve the environment, government, and social issues. The top holdings in this ETF include companies like Apple, Disney, and Google. Commitments to sustainability, philanthropy, and social innovation are the qualifying factors that allow a company into this ETF.

If you go to the Stash website and look up the ETF you can read more about how these specific companies qualify to be in the “Do the Right Thing” category. You may or may not agree with Stash’s analysis, but again, that’s the importance of research when you invest. Over the week, the Stash app auto invests the next installment of money that you have prearranged. Stash will send you an email in advance before they auto invest the amount you set to be invested weekly. For beginner investors the auto-invest feature is helpful to keep you consistent and the email reminders keep you mindful of your wallet agenda values.

The But…

There is always a risk that if I invest based on my personal ethics, I may or may not get the kind of return (profit) on my investment that I could if I only invested in companies that are doing well in the market. If I had a higher risk profile and I wasn’t interested in investing based on my personal values, I might have higher returns in the long run. But because I want to support businesses that are thinking about social factors as well as their profit margin, I also have to recognize that my return might be lower than if I were to invest in bigger indexes. It’s your choice when you start investing and it’s important to ask yourself: what’s your goal for your money? Maximum growth of your portfolio (that just means all the investments you have)? Supporting a certain industry? Retiring at 40? Supporting like-minded companies? Answering those questions can help you map out how you are going to get there.

Conclusion

Next week, I’m going to discuss increasing my investment amount. The scaredy-cat in me started really low, but I’m going to see what happens when I put all the allocated money I have into different ETFs. Stay tuned!

 

Image credit: Mirjana Jesic

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